Adverse credit doesn’t necessarily stop you from getting a mortgage — here’s why

Adverse credit doesn’t necessarily stop you from getting a mortgage — here’s why

Maybe it’s the missed credit card payments you racked up while going through your divorce, or the loan you defaulted on in 2023 after you were made redundant. Having an adverse credit history can leave you feeling like you’re living with a dark cloud over your head. 

If this sounds like your current financial situation, you’re not weathering this storm alone. 

A new study, by Pepper Money Specialist, found that many of us are in the same boat with 15.16 million people in the UK believed to have a track record of poor repayment history on one or more loans or credit cards. The same study goes on to reveal that 49% of people who missed one credit card payment, have gone on to miss further payments. 

 

Racking up debt

“Sometimes people find themselves in a debt cycle through no fault of their own,” award-winning mortgage adviser Jo Jingree of Mortgage Confidence explains. 

“Having seen through clients, I know large credit card bills, missed payments or defaults can happen when people are made redundant, or have to give up work to care for a sick family member. And in 2024, with the higher costs of living, it’s easy to see how it happens.”

But here’s the thing: no matter whether you have a squeaky clean credit history or you have fallen on hard times, having adverse credit doesn’t necessarily stop you from getting a mortgage

“Yes, your credit history does have a part to play in getting a mortgage (as lenders will want to see how reliable you are when it comes to repaying money) but it’s all about having a conversation to help paint a picture of where you are up to with your finances,” Jo says.

“Lenders know that life happens and I work closely with a large number of specialist lenders who accept those with low credit scores, defaults, CCJs, mortgage arrears, missed payments, discharged IVAs and bankruptcies.”

 

‘The mortgage process was easy and judgement free’

Just last month, Jo helped a client who found himself in deep water after taking out loans and credit cards to help pay for his monthly expenses while navigating Brexit, Covid and soaring interest rates. Instead of burying his head in the sand, he decided to get on top of his finances, secure a mortgage and at the end of 2023 he now has a ‘home of his own’. Here he tells his story…

When I bought a flat in 2009, I got a mortgage with a high interest rate and was locked into the deal for five years. The monthly payments were high and I found myself with little money to spend on other things, so I ended up taking out loans and borrowing on credit cards. 

“I planned to sell my flat and move out of London where I knew I would be able to buy somewhere with a good deposit and a smaller mortgage, while also paying off my debts. Brexit and Covid put a halt to that plan and my debts continued to mount up. 

“I sought financial advice but in the end I decided to go on a Debt Management Plan. Halfway through the plan and having paid off half my debt, I decided to investigate if it would still be possible to get a mortgage if I sold my flat and paid off the rest of the debt. 

“I tried some brokers that I found online. But was left with the impression that it wouldn’t be possible. But then my friend told me about Jo Jingree at Mortgage Confidence. I was convinced that they wouldn’t be able to help but I decided to get in touch anyway. 

“I was surprised to learn that there are lenders who provide mortgages for people with adverse credit. And I was even more surprised when I got a mortgage offer. The mortgage process was easy and judgement-free. Previously I had been constantly reminded that I had a black mark against my name, which made me feel ashamed and criminalised. 

“I am now debt-free and have a home of my own. I would recommend anyone in a similar situation to get in touch with Jo, especially if they feel they have come to the end of the road in sorting out their financial difficulties or becoming a homeowner.”

 

A helping hand

According to the Pepper Money Specialist report we mentioned earlier, 13% of those who have experienced adverse credit in the last three years say that they intend to purchase a property in the next 12 months. 

If you’re included in this stat, we offer a no obligation 30-minute consultation to help deal with these sorts of enquiries. So drop Jo an email to find out your options. 

 

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £399. Your home may be repossessed if you do not keep up repayments on your mortgage.

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