People with low credit scores often assume their chances of getting on the property ladder sit somewhere between slim and zero, as they’re almost always turned down by high street lenders, receiving one rejection after another.
But one expert who specialises in securing mortgages for people with ‘adverse’ credit says having a poor credit score shouldn’t shatter your dreams of owning a property — and that there is a whole sector of lenders willing to lend to you.
Emma Jones, managing director at nationwide mortgage broker and adverse credit specialists Whenthebanksaysno.co.uk, said: “The problem is that when people think of mortgages, they still tend to think of high street banks. It’s how we’ve been conditioned. So they apply for a mortgage with a well-known bank and get rejected, try another, get rejected again and then, more often than not, give up.”
Emma said there was now a wide range of specialist lenders that cater for exactly the kind of people who are rejected by recognised names on the high street: “Many applicants are really surprised when we tell them that just because a few high street banks have said no doesn’t mean other specialist lenders will — and that these lenders have been set up specifically to lend to people with weaker credit scores.”
Emma said that people with poor credit, such as a history of missed payments and other more serious debt issues, like County Court Judgements (CCJs), should expect to pay more than a borrower with a good credit score.
View 3 ImagesEmma Jones said it could be done(Image: Pexels)
She continued: “Yes, if you approach any lender with a poor credit score you’ll almost certainly be paying a higher interest rate than if you are a ‘prime’ borrower taking out a mortgage through a high street bank. But if the payments are affordable and they mean you’re able to get onto the property ladder, it’s something to be considered, especially if the repayments are still cheaper than the equivalent money you’d be paying in rent.”
Emma said that borrowing through a specialist lender had the added benefit that it would improve a person’s credit score.
She continued: “Many people with poor credit scores will take out a mortgage through a specialist lender, generally at higher rates. But after a couple of years of making their mortgage repayments, they’re seen as much more reliable by ‘prime’ lenders, as they have that all-important track record.
“Many of the people we arrange mortgages for end up taking their next mortgage out with a high street lender. The specialist lender effectively acted as a ‘bridge’ to better rates available through mainstream lenders.”
View 3 ImagesThere are more options than many might think, she said(Image: Yui Mok/PA Wire)
If possible, Emma also said people with poor credit scores should try to save up for a bigger deposit: “The bigger deposit you put down, the less risk you represent to the lender and, in many cases, the cheaper the mortgage rate you’ll be able to secure.
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“But even if you can’t get a bigger deposit together, don’t give up. There are plenty of lenders out there who will take a good look at you rather than give you a straight ‘no’.”