Tag: first time buyers

We’ve helped 1000s of customers, and still counting!

Posted on | by Neil Alexander

We’ve made it our mission to help as many people as possible find their perfect mortgage, specialising in helping people with a bad credit history or previous credit issues – we think everyone deserves a chance to remortgage or own their dream home!

Difference between going direct to a lender and seeking the advice of a mortgage broker:

Going direct to a lender: This means you go directly to a lender to seek a mortgage, such as a bank or building society. They’ll probably have a range of products and eligibility checks will decide what products and deals you could access; however, you’re limited to what that lender has to offer.

Using a mortgage broker:

A mortgage broker is fully trained and versed in finding the best deal on the market, our brokers, for example, are all experts in bad credit mortgages and work with over 100 lenders. This means they have access to a huge variety of products that you could be eligible for, as each lender will have different approval criteria- and sometimes brokers can even find deals not advertised openly on the market. Your broker will make it clear which lenders are likely to accept your application and can help you prepare so you have the best chances of approval.

Our expert brokers come with a wealth of experience and work with over 100 lenders who consider all applications, even with a bad credit history.

Speak to an advisor

We could help you secure a…

First-time buyer mortgage:
As a first-time buyer, buying your first home is a really exciting time – but it’s a daunting one too. At Clever Mortgages we’re here to help. Your dedicated adviser will talk you through every step, to make sure that you get the right mortgage to match your specific needs.

Remortgage:
There are many reasons to consider remortgaging, whether to save money on monthly repayments, get on a fixed rate to help you budget, consolidate debt or raise cash tied up in equity for improvements(link to home improvements blog)– whatever your need, we have access to a wide range of products and could help to secure you finance no matter what your circumstances.

Debt Consolidation mortgage:
A debt consolidation remortgage can help you combine all or some of your debt into one consolidated loan, allowing you to close multiple accounts you may have and only deal with one monthly repayment. You can use a debt consolidation mortgage to consolidate both secured and unsecured debt, and could help you save money on several costly interest rates. Our specialist advisors could help you find the right debt consolidation mortgage for your financial situation, even with bad credit.

Secured loan, or a homeowners loan:
A secured loan allows you to take out a second mortgage on your property while keeping your primary mortgage intact. If you’re struggling to find a remortgage, or if you just want to keep your current mortgage while accessing cash tied up in your home, a secured loan could be the solution for you.

Help-to-Buy mortgages:
The Help-to-Buy scheme means you only need to put down 5% of a home’s value for a deposit. The Government will then boost this amount with an equity loan of up to 20% (40% in London). At Clever Mortgages we work with many lenders who could offer you a Help-to-Buy mortgage whether you’re a first-time buyer or purchasing a new home.

Shared-ownership mortgages:
Whether you’re a first-time buyer or home mover, we could help you buy a share of between 25-75% of a property and then pay rent on the remaining share. Sometimes it’s hard to save up a full deposit, a shared ownership mortgage could help you move into your dream home!

Right-to-Buy mortgages:
Right-to-Buy allows tenants of council properties, and some housing associations, the legal right to buy, at a large discount, the council house they are living in. If you’re a council tenant, we could help you to buy the property at a significant discount through the Right-to-Buy scheme.

Buy-to-Let mortgages
Having a buy to let property could be an investment for yourself or your family.  You may benefit from additional monthly income and capital gains in the value. Our expert brokers can help you purchase or refinance a buy-to-let, even with bad credit.

Self-build mortgage
If you’re planning on building a property you might want to consider a self-build mortgage. Whether you have built several properties before or if you’re planning your first self-build, we could help secure a mortgage that’s right for you.

Second-home mortgage
If you already own a home but are looking to purchase a second property, we could help find the right mortgage for you. With a second mortgage application, there could be more challenges to overcome than with your first mortgage, but Clever Mortgages can support you through the process so you can successfully buy your second home.

Professional mortgage:
Some careers can make it harder to find a mortgage. Perhaps you’re self-employed, or work in contract-based roles, maybe you’re a company director – we can help guide you and our expert brokers can help you find the best mortgage to suit you.

Our advisors and brokers are all fully trained in bad credit situations and work with over 100 lenders, covering almost all financial situations and giving us the ability to help people who might be struggling to find a mortgage elsewhere. We understand that bad credit can happen to anyone, for a variety of reasons but believe everyone deserves a chance to own their dream home and find a mortgage to get back on track.

We could help you get your perfect mortgage, even if you’ve experienced:

Here’s how we helped one couple save £485 a month

Debt consolidation remortgage, even with bad credit Secured a 5 year fixed rate of 2.10%
Consolidated to one monthly payment Credit score repairing

At Clever Mortgages we don’t believe that people should suffer due to a bad credit history. Mr H had been in an IVA and Mrs H was in a Debt Management Plan. They wanted to consolidate their secured loan, plus three other debts, into a new mortgage product – hoping that this would bring down their monthly repayments.

Mr and Mrs H were paying £1,582 and are now paying £1,097 per month.  Clever Mortgages we were pleased to be able to help them make a real difference to their lives, which is also helping them to improve their credit score.

 BalancePaymentRateProductTerm
Previous Mortgage£61,000£4901.25%Tracker12 Years
Previous Secured Loan £43,000£43610%Standard Variable Rate12 Years
Previous Unsecured debts£44,320£657VariousVariousVarious
New Mortgage£150,00£10972.10%5 Year Fixed13 Years

Previous Mortgage

Balance£61,000
Payment£490
Rate1.25%
Term12 Years

Previous Secured Loan

Balance£43,000
Payment£436
Rate10%
Term12 Years

Previous Unsecured Debts

Balance£44,320
Payment£657
RateVarious
Term13 Years

New Mortgage

Balance£150,000
Payment£1097.67
Rate2.10%
Term13 Years
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Can I get 100% mortgage with 0% deposit?

Posted on | by Neil Alexander
In this article

What is a 100% mortgage?

Types of 100% mortgages

Can I get a 100% mortgage?

Can I get help with buying my first home?

Pros and Cons of 100% mortgage

Usually, lenders require at least a 5% deposit to readily provide a mortgage. A higher deposit means you’ll be eligible for more lenders and products, plus access to better rates- however, this isn’t always an option for first-time buyers in the current market. For those who can’t save up a deposit, or those who want to get onto the property ladder as soon as possible, there are other routes you can take that involve a much smaller, or no deposit.

What is a 100% mortgage?

A 100% mortgage, in the simplest terms, would be a loan that covers the total value of the property you’re purchasing, without the need to save a deposit of your own. It would entail the prospective buyer loaning the full cost of the property using a single provider.

It’s vital to be aware that whereas this may sound appealing, especially to first time buyers – a 100% mortgage (using just one provider to lend the full purchase price) is extremely rare, or unavailable in the current market. Lenders generally view a 0% deposit mortgage as a very risky investment.

Speak to an advisor

Types of 100% mortgages

The only types of 100% mortgages currently available are guarantor, Right to Buy and Shared Ownership mortgages. But even these are not truly 100% mortgages.

Guarantor mortgages

Are possible if you have a close family member who is both able and willing to help, requiring them to offer their own savings, property (or both) as security for your loan, thereby becoming your guarantor. Your guarantor would be liable for any payment you miss and would be partially responsible for your mortgage.

Right to Buy

A right to buy scheme that gives you the right to buy your council house at a discounted price if you fit certain criteria. Some lenders allow you to borrow 100% of the discounted price (the discount varies depending on the type of property and the duration of your tenancy), with the different between the discounted price and the full value of your property acting as the deposit. LINK TO BELOW INFO

Shared Ownership

A scheme where you purchase a percentage share of the property, say 25%, and pay rent to the housing association for the other 75%.  Some lenders will allow you to borrow a 100% of the share you purchase, most lenders however require you to put in a 5% deposit.
For example, take a property that’s valued at £150,000, You could buy 25% of the property, which would be £37,500. Of that you would need to put down £7,500 (5%) for the deposit then take out a mortgage with a lender to pay the remaining £30,000 (20%). LINK TO BELOW INFO

Can I get a 100% mortgage?

With a willing and able guarantor or via one of the schemes mentioned above, you could be eligible for a 100% mortgage with a 0% deposit – however, deals are scarce and there’s no guarantee you’d be offered a 100% mortgage. It’s advisable to speak to an experienced mortgage broker to get the best information for your personal situation – mortgage brokers have access to a wide range of products and should be able to help you onto the property ladder.

  • Guarantor Mortgage Types
  • Family deposit mortgages
  • Saving as security

If your family member wishes to use their cash savings as security for your loan, some lenders will offer a mortgage where your family members deposit around 10/20% of the property price in a special savings account. This money will be held as security for your mortgage until certain conditions have been met, whether that be based on a set number of years or until you’ve paid off a pre-agreed sum of your mortgage, at which point your family member would have their savings returned.

It’s still possible for your family member to earn interest on the money that’s being held – however, it may be at a lower rate than other savings accounts. It’s well worth speaking with a mortgage broker to find the best deal for you and your family.

Communication between yourself and your guarantor is key; they must be fully aware of their responsibility and understand the terms of the agreement made. If you are unable to meet your mortgage repayments, the lender will look to your guarantor to make the payment. If the lender had to repossess the property and it was sold with negative equity, your family member’s savings could be used to make up the difference.

Property as security

Your family member can choose to use their own property as security for your mortgage. Your family member would need to own at least 25%-60% of their home outright for this to be viable but, like using savings as security, as long as you are able to keep up repayments for your mortgage, this can allow first-time buyers struggling to save up a deposit to get onto the property ladder.

Family offset mortgages

A family offset mortgage allows parents to help their children or grandchildren to take out a mortgage and help them onto the property ladder.

This type of mortgage works by you putting your savings into a linked savings account (with your child or grandchild), which is set up with the mortgage lender.

This then acts as a deposit for their chosen property and the lender provides the finance for the remaining value amount. Obviously, the more money that’s in the bank account – or offset against the property value – the smaller your child or grandchild’s mortgage will be.

Interest isn’t paid on the amount in the bank account – only on the amount that your child or grandchild takes out as part of their mortgage. This rate will depend on the lender, rate and term.

What’s good about this type of mortgage is that the savings remain in your name. You can take your money back once 75% of the property value has been paid back. You won’t gain any return by helping your children or grandchildren in this way, but you also won’t lose anything.

Some lenders allow parents to deposit cash that reduces the interest charged on the child or grandchild’s mortgage. Others allow buyers to borrow 100% of the purchase price if 20% of this amount is deposited in the linked account. This cash is then subject to a charge.

Family link mortgages

The Post Office Family Link mortgage allows first-time buyers to borrow 100% of a property’s value, using the (outright owned) property of a close relative by taking out two mortgages; one on the home you wish to purchase, and one on the home your relative owns outright. This option is popular with parents who’d like to help their children get onto the property ladder but don’t have access to a large lump sum to help.

The Post Office would loan you 90% of the value needed to buy your home as a mortgage, and as the buyer, you’d be the only person named on this. The remaining 10% needed for a deposit would be taken as a mortgage secured against your family member’s home, with both of you being named on the mortgage but you won’t be added to the deeds of your relative’s property.

You, the buyer, would be expected to make two separate monthly repayments for the first five years. One repayment towards your family member’s mortgage – which is interest free, and one repayment towards your own mortgage – which is subject to interest. For the remaining term of your mortgage you’d only have to make one monthly repayment towards your mortgage until it’s paid off.

It’s important to make sure the repayments are manageable, or you’d risk losing your property.

If you don’t have a potential guarantor, there are other solutions to help you in your journey to purchase your first home.

 

Speak to an advisor

Can I get help with buying my first home?

Help to Buy

Help to Buy is a UK Government-funded project, designed to help people with lower incomes get onto the property ladder. There are several schemes within Help to Buy, focussing on different aspects of the buying process and all created to help as many people as possible secure their own homes.

Help to Buy – Equity Loan

The Help to Buy equity loan scheme gives you the chance to purchase your home with a small deposit by boosting the amount you’ve saved. You would initially be expected to save up a minimum 5% of your deposit, then using the Help to Buy equity loan, the Government would grant you a loan of up to 20% (of the property’s value) – giving you a 25% deposit and access to far more mortgages and better deals.

The Help to Buy equity loan is available to first-time buyers and current homeowners – however, the property must be a new-build and can’t exceed the value of £600,000. The Government also provides a slightly altered scheme in London for prospective buyers, offering an equity loan up to 40% of the property’s value, reflecting the increased property costs that London dwellers face.

If you have more than 5% saved, don’t worry! You can save up to 65% of your deposit and still be eligible for this scheme – if you use a minimum of 10% Help to Buy equity loan and a minimum 25% mortgage.

Another huge benefit of this initiative is the interest – or lack-of. You won’t be charged any interest for the first five years of taking out your equity loan. After that you’ll only be charged a fixed fee of 1.75%, which rises each year following the increase of the Retail Price Index, plus 1%.

The Help to Buy equity loan scheme has been extended to 2023, meaning there is still time to save up a 5% deposit and take advantage of this offer, However the scheme is being amended from 2021. This scheme is available in England – and although there Help to Buy opportunities in Scotland, Wales and Northern Ireland, the terms are slightly different, so it’s worth looking this up if you want to buy a house in any of these areas.

It’s important to be aware that you can’t use the Help to Buy scheme to buy a second home or property to let.

Help to Buy – ISA

Unfortunately, the Help to Buy ISA scheme ceased accepting new applicants November 2019, if you’re eligible you can still apply for a Lifetime ISA.

Help to Buy – Shared Ownership

The Help to Buy shared ownership scheme is, a combination of buying and renting. Often aimed at first-time buyers and low-income households, this initiative allows you to buy a share, usually around 25% – 75%, of a resale or new-build home. You would own some of the house and pay a reduced rent for the rest.

This allows prospective buyers on a lower income to access the property ladder, as your deposit would be a percentage of the share being purchased as opposed to the overall cost of the property, meaning you would need a much smaller deposit and mortgage than with full ownership.

Shared Ownership properties are always leasehold, meaning you’d own the properly for a pre-agreed span of time but not the land. It’s possible to renew leases. You do have the right to buy additional shares in the property, if your share reaches 100% equity, the property would no longer be shared ownership. It’s important to check if there’s a cap on the number of shares you can purchase in the property as this may hinder those who aspire to full ownership.

Right to Buy

Right to Buy is a Government initiative aimed at helping local authority tenants to buy their council homes with a substantial discount.

The discount you get is based on the:

  • Market value of the property
  • Type of property, for example house, flat
  • Amount of time you’ve rented and lived in the property

There is a limit on the discount you can receive but the savings are still substantial, making this a great solution for council tenants to get onto the property ladder. If you’re purchasing a property with a Right to Buy mortgage and you’ve lived in the property for 3-5 years, you could be granted a discount of 35%. After that the discount increases 1% for each additional year you’ve been a council tenant.

To qualify, you must have been a council tenant for a minimum of 3 years. This doesn’t have to be a consecutive 3 years, so, if you had a spell of renting privately in between living in a council home, then you could still be accepted.

You’ll still have to provide a deposit and take out a mortgage with the Right to Buy scheme, but if you’re struggling to save enough for a deposit, some lenders may allow you to put your discount towards the purchase price, meaning you wouldn’t need the initial lump sum.

If you were renting a council home before it transferred to another landlord (such as a housing association), you might still be eligible to buy your home with the Preserved Right to Buy scheme.

Lifetime ISA

A Lifetime ISA, or LISA, is a savings account designed to help people aged between 18-39 buy their first home or save up for retirement. Using a Lifetime ISA, you can put in up to £4,000 per tax year, which leads on to one of the most attractive features – the bonus.

The Government will pay a 25% bonus into your Lifetime ISA account, up to a maximum of £1,000 per tax year. This bonus would be paid in monthly so you’d benefit from compound growth – plus, any interest you earn on what you save would be tax-free.

So, if you save £2,000 in a tax year, the Government would pay you a bonus of £500.

It’s important to remember that you can’t just withdraw the money from your ISA to spend on whatever you like without facing a penalty – unless it’s to help buy your first home. After you turn 60, the money can be used as you like to support your pension. If you withdraw any before you’re 60 though, you could face a 25% penalty on the total amount in your account.

At Clever Mortgages, we have access to a wide range of mortgage solutions. Get in touch now and let’s discuss your lending requirements.

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Pros

  • 100% mortgages are evolving with lenders, meaning more 100% mortgages are being created with different criteria, this means more people in more varied financial situations might be able to access new types of 100% mortgages.
  • Gives you the opportunity to buy a property without saving up a deposit
  • Some 100% guarantor mortgages allow your family member to earn interest on savings that are used as security

Cons

  • It’s hard to find and get approved for a 100% mortgage. Lenders don’t offer them very often, and when they do- they often have higher interest rates than 95% or less LTV mortgages
  • You usually need a close family member who’s both willing and able to be your guarantor
  • If your mortgage requires savings as security, not all deals allow your guarantor to earn interest and the money will be inaccessible during the term of your mortgage
  • If your mortgage requires your guarantor to hold their home as security, your family member’s home could be at risk of repossession if repayments aren’t made
  • You still need to consider all the associated fees with buying a property, borrowing 100% of a property’s value with a mortgage won’t cover the other fees.
  • If you borrow 100% of the properties value and the property drops in value, you risk not being able to pay off your full mortgage should you chose to remortgage or sell.

If you can’t get a 100% mortgage?

If you can’t get a 100% mortgage, you should look at the property prices in the area you’d like to purchase a property and aim to save a deposit of 5% or more. Saving up can be daunting, but it doesn’t have to be – check out our guide on saving for a deposit

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key to a help to buy mortgage house

Is The Help To Buy Scheme Really Helping?

Posted on | by Neil Alexander

A new report by the National Audit Office (NAO) shows that many of people on the Help to Buy scheme could have afforded a house regardless – now some of those buyers are in negative equity, and in a situation far worse than if they’d gone it alone.

Firstly, what is the Help to Buy scheme?

Help to Buy was launched in April 2013 by former chancellor George Osborne as a way of getting more buyers onto the property ladder. It’s open to both first-time buyers (who it was largely aimed at) and home-movers too, but is only ever available for buyers of new properties. Essentially it involves:

  • The buyer has to have at least 5% of the sale price of a new-build flat or house as a deposit.
  • The government lends the buyer up to 20%, or 40% if you live in London, of the sale price. This loan is interest-free for five years. Afterthe interest-free period, buyers are charged 1.75% on the outstanding amount as interest. This fee increases each year by Retail Price Index plus 1%.
  • The buyer borrows the rest (up to 75%, or 60% if you live in London) from a mortgage lender, on a repayment basis.
  • Buyers need to repay the equity loan in full after 25 years, when the mortgage term finishes or when you sellyour home – whichever happens first.

The scheme is currently due to end in 2023, bringing an end to a flagship loan programme that currently divides financial critics – some feeling it boosted, and others that it harmed, the UK property market.

It’s now been used to support more than 200,000 purchases. It was introduced by the government with the aim to improve on a falling in property sales, following the financial crash in late 2008, and the tightening of regulations over the availability of high loan‑to‑value and high loan-to-income mortgages that followed on from this.

Michelle Neville, Sales Director at Clever Mortgages tells us: “At Clever Mortgages we fully understand the needs and drivers for first-time buyers.  We help people day-in-day-out get their first mortgage secured, and we know from speaking to our customers how tricky it can be to get on the property ladder. But sometimes customers are surprised that getting a mortgage can in fact be easier than they first think, and with our guidance they can find ways of borrowing more, even with less deposit. We work with a trusted range of lenders, and all have their specialisms for differing needs.”

So, what are the criticisms of the Help to Buy scheme?

The new report suggests that some buyers using the scheme risk finding themselves in negative equity. The National Audit Office also highlighted figures showing that many people using the government’s Help to Buy scheme could have purchased their properties without it.

Perhaps surprisingly, the scheme isn’t means tested. Around one in 25 home buyers using the scheme had household incomes of over £100,000, 10% of buyers had household incomes of over £80,000, or over £90,000 in London, the National Audit Office (NAO) said, and so could have afforded to buy their own home themselves, even if it wasn’t in their ideal location.

The Help to Buy scheme can be a useful aid for many people, but it’s not always the most suitable option. If you’re a first time buyer considering the Help to Buy scheme, speak to us first to see if it really is the most suitable option for you’.

Help to Buy and the property market

The Department’s independent evaluations of the Help to Buy scheme show it has increased home ownership and housing supply – and has therefore achieved that goal, or at least in the short-term.

Housing firm Persimmon, for example, is the biggest beneficiary, with almost 15% of the sales made under the Help to Buy Scheme. Redrow made up 3.7% of sales, Bellway accounted for 6.7%, Taylor Wimpey made up 11.9%, and Barratt made up 13.3% %, according to the NAO’s analysis.

The report states that the government will aim to wean the property market off the scheme over the coming years, whilst still ensuring that developers continue to build new properties at the rates they are doing at the moment.

I’ve bought a house with Help to Buy – what next?

If you’re concerned about the findings from the report, and aren’t sure when or how you can end  your commitment to the scheme, or whether you’re in negative equity, now’s the time to seek advice.

  • Now’s the time to look into your situation – waste no time in gathering your documents, and setting aside some time to review them to find out exactly where you stand.
  • Crucially, find out whether you’re in negative equity. Negative equity means that your house value is less than what you owe on it – so you’ll need to know what your house is worth now, and what your current mortgage balance is.
  • Find out the terms you had when you took out the scheme – there’ll most likely be a set amount of time you have to pay the loan off over.

Seek expert help. It might be time to remortgage, we help customers every day find a great remortgage deal that’s right for them, even if they have bad credit.

We can help

Clever Mortgages help first time buyers every day to take their first step on the property ladder. If you’re moving house and want to speak to one of our expert brokers about next steps, get in touch today.

Michelle Neville says, “Do get in touch, our brokers are experts in finding the right lender whatever the situation. We can offer advice to you if you’re on the Help to Buy scheme and aren’t sure what your next move should be – or if you’re a first-time buyer who’s exploring your options.”

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A house shaped ornament hangs from the branch of a tree

Myths around mortgages and credit scores

Posted on | by Neil Alexander

Your credit score is one of the most important pieces of information about you when it comes to borrowing money. Mortgage lenders use your credit record to help them make a decision on whether they should lend to you.

However, despite their importance, there’s still a lot of misunderstanding and confusion around credit scores and what they mean. Below, we explain the most common questions and myths.

The most common question is, can you get a mortgage with low credit score?

The answer is probably yes, although every situation is different and it can sometimes limit the mortgages available to you.

We have a team of specialist brokers that deal specifically with bad credit mortgages. Speak to one of our brokers today to see if we can help you. There is no obligation and the initial advice is free.

Read below for all our mortgage myths around credit scores

What to do next

Speak to our expert brokers for free advice on all types of mortgages, remortgages, even if you have bad credit. One of our expert brokers will be able to review your current situation and advise on the best way of moving forward with our knowledge and access to over 100 lenders and thousands of mortgage products.

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The myths uncovered

Here we list some of the myths surrounding credit scores and what they can mean for your mortgage application.

“My credit score is too low to get a mortgage”

There’s no set minimum score required to get a mortgage. This is determined by the lender themselves. As lenders have different levels of tolerance, some will be more willing to consider you than others if you have bad credit. Although many won’t want to risk lending to someone with bad credit, there are lenders who can help.

If your credit score is low then applying with a company who specialise in offering bad credit mortgages will give you the best chance of getting approved. These mortgages work in exactly the same way as a standard mortgage, but interest rates will be higher and it’s likely that you will need to put down a bigger deposit.

“Negative information on my credit report will stop me getting a mortgage”

There are still mortgage options available to people who have negative information on their credit file. This might be a CCJ, defaults from previous loans or even a bankruptcy discharge. You may have otherwise been in an IVA or other debt plan to help repay your debts. If you’ve struggled financially in the past but are back on track now then there are lenders who will consider your application. This negative information remains on your credit file for a maximum of 6 years, so if you’re unsure that it still exists you should check your credit report. You can do this through a credit reference agency such as Experian or Equifax.

“I’ve never borrowed which means I’m a safer customer to lend to”

Lenders actually prefer to lend to people who have some history of making loan repayments. It provides proof that you have previously made payments on time and in full. As you’re likely to continue with this behaviour, it can make you be perceived as more trustworthy than someone who hasn’t borrowed before. This is because those who haven’t borrowed can’t provide any evidence to show they will make payments on time.

Having no credit can often make it just as difficult to get a mortgage as having bad credit. You should work to try and improve your credit score if you’re in this situation. This can often be the case if you’re a first-time buyer and have never had a mortgage or loan before. If you’re getting your first mortgage, here are some ways you can improve your chances.

“My partner has bad credit so neither of us will be able to get a mortgage”

If your partner has struggled with debt then it’s natural to worry about how this might affect you as well. The good news is that there are lenders out there who are willing to consider your application whether you’re buying a house individually or looking for a joint mortgage. If you have no financial links with your partner already, such as a loan or a joint bank account, then your partner’s credit score won’t affect you getting a mortgage independently of them. Even if you’re married you won’t be associated financially unless you have some sort of joint finances. Alternatively, you might be asking will my bad credit score affect my partner?

If you’re looking for a joint mortgage, however, you will become financial associates and will both be liable to repay. A joint mortgage will allow you to borrow more money, as it will take into consideration both your incomes.  Despite whether or not you have a good credit score, your partner’s bad credit will affect your interest rate on the mortgage and will likely require you to put down a larger deposit. As each person’s situation is unique, it’s best to speak with a mortgage advisor before applying.

Take a look at our article on joint mortgages for further information.

“Being on the electoral roll isn’t important”

If you have bad credit you should be doing everything you can to help improve your score. One of the ways you can do this is by making sure you’re on the electoral register. If you’re not then you should register as soon as possible. Although it’s not compulsory to vote, having your details available on the electoral roll allows lenders to easily verify your identity and address. This can have a positive impact on your credit score. If you’re not sure if you’re already registered, you can check on the website Your Vote Matters.

“Applying to different companies will increase my chances at being accepted”

Many people assume that if they keep applying for finance they will eventually find a company who will accept them. This couldn’t be more incorrect. When searching for finance, multiple applications can be one of the worst mistakes you can make. Each time you make a credit application it leaves a mark on your credit file. This is because the lender will typically carry out a “hard” search, which will leave a footprint on your credit file that other lenders can see. These have a direct impact on your scoring as they show your level of need for credit. If you have too many applications made within the same time period, lenders can be put off by your application as it can seem as though you’re desperate for credit and therefore potentially less likely to make payments on time.

The best way to approach finance applications is to do your research before applying and if you know you’re going to apply to more than one, then try and spread these out over a few months. If you want to make comparisons, you can always ask the lender to run a soft search for a quote, which will only be visible to you.

“I’ve not checked my credit score but I presume it’s ok”

Your credit score is not something that will be made itself known to you. So if you don’t check your credit score, you won’t know if it’s good or not. Many people have never checked their credit reports. Some people do this because they’re afraid of the result; others don’t check it because they don’t understand the importance of it. Some people also avoid checking their credit report because they think that this will have an impact on their score. In actual fact you should make sure you check your score regularly so you can know the situation you are in, how you can improve it and what help you to identify what types of finance you will be eligible for. This can help you avoid being rejected.

You can check your credit score through a credit reference agency such as Experian or Equifax.

“My bad credit will always hold me back”

Just because your credit is bad now doesn’t mean it will stay this way forever. There are a number of things you can do to improve your credit score and get your finances back on track. This might mean paying higher interest rates, for now, to make up for it, but over time you can prove to lenders that you’re a trustworthy person to lend to again.

What to do next

Speak to our expert brokers for free advice on all types of mortgages, remortgages, even if you have bad credit. One of our expert brokers will be able to review your current situation and advise on the best way of moving forward with our knowledge and access to over 100 lenders and thousands of mortgage products.

Mortgage brokers can help you find the best deals on the market – not just from one lender. With a broker you’ll get:

  • Valuable knowledge, through years of experience helping customers with bad credit to find mortgages
  • Find the right mortgage first time – some mortgages are only available through a broker
  • Help with the application process
  • Advice on all options available, such as help to buy, guarantor or shared ownership

Speak to a broker

Christie Buck

Christie is a specialist mortgage broker, whose been working for Clever for 6 years. She has been in the financial industry for nearly 11 years which included assisting clients in financial difficulty setting up IVAs.

Call us on: 0800 197 0504

Arrange a call

About Clever Mortgages

We specialise in assessing an individual’s situation, and finding the right mortgage solution for them. We can help:

  • With remortgages, buy-to-let, and first-time buyers mortgages. We have experts who cover these areas
  • Even if you’ve got bad credit – we help people every day with a variety of credit histories to find the right mortgage
  • With applications, as we’ll take the hassle away. We require your details once and we’ll know the best lenders for your circumstance
  • Our team know the lenders that are most likely to say ‘yes’, and give you the best rates

What should I do next?

  • You enquire online with us today or request a call back
    Our simple form takes a couple of minutes to fill in, this gets the ball rolling
  • One of our experts will give you a call to find out more about your situation
    We have experts in remortgaging, who focus solely on helping customers save money
  • We do all the hard work for you
    We search the market for the trusted lender that’s right for you
  • Our expert will get back in touch
    We can guide you every step of the way, and we’ll always keep you up-to-date with progress

Speak to a Mortgage Adviser

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A person draws an image of a house

Top tips for getting a mortgage

Posted on | by Neil Alexander

When you’re looking to buy your first home, getting a mortgage will be your top priority. You will want to do what you can to get the best chance of being approved. Here we look at the top ways you can increase your chances of getting a mortgage.

1.     Check your credit score

Checking your credit report is the first thing you should do before applying for a mortgage. Lenders favour applicants with a good credit score, but there are still lenders who will consider your application if you’re suffering from a poor credit history or no credit history. Either way, it’s good to know what situation you’re in so you can work to improve your credit score if you need to. This means you can avoid any nasty shocks when applying for a mortgage as you will have a better idea of what you can expect. You will also be able to see if there are any errors on your credit file that need correcting before applying for your mortgage.

You can check your credit report easily through credit reference agencies such as Experian and Equifax.

2.     Work out your affordability

Before applying for a mortgage you should work out for yourself what you can afford to pay each month. Adding up how much you spend on monthly outgoings will allow you to see what you have left to use towards your mortgage. It will also allow you to see which areas you can cut back on or where you can make any lifestyle changes if you need to in order to be able to afford your mortgage payments.

Our online calculator can help you to work out how much you can borrow.

3.     Save as much as you can!

No matter how good your credit score is, or how low your monthly outgoings are; if you don’t have a sizeable deposit then it’s unlikely you’ll be able to get a mortgage at all. For more information about deposits take a look at our beginner’s guide to mortgages article.

You will also need to ensure that you have enough savings for other costs that will arise when buying a house. This includes any legal fees as well as stamp duty if the property is worth more than £125,000.

If you haven’t got one already, a savings account is essential when saving for a house. You should set up a direct debit from your current account to your savings account each month. If you think you might be tempted to access these savings before this point then you might want to consider a fixed rate bond.

4.     Carefully manage your bank accounts

Nothing looks worse to a mortgage lender than a badly managed bank account. Manage your money responsibly to ensure your bank accounts are in the best shape before applying for your mortgage. Don’t go overdrawn and make sure you pay off any credit card payments on time.

If you have any outstanding debts from previous loans then it’s a good idea to try and pay these off before applying for a mortgage. Lenders will want to see that you have as few debts as possible when applying for a mortgage. This will help with your affordability and also help to improve your credit rating. If you do have any large loan repayments to make then you should consider repaying these before making your mortgage application.

5.     Timing is everything

You should apply for your mortgage when your credit score and bank accounts are in good shape. If you’ve recently had more money coming out of your account than usual then it might be a good idea to wait a few more months so these transactions don’t show on your most recent payslips.

You should also try to avoid getting a mortgage if you’re between jobs. If you’re in your probationary period you are likely to be considered as higher risk by lenders. Some will only consider your application if you have been in your role for over a year. If you’ve started a new job in the last few months then it’s a good idea to wait until you’ve passed your probationary period until you apply for a mortgage. If you’re looking to change jobs then you should wait until your mortgage has been accepted before you apply for a mortgage.

You should also wait for the best time in your own life to get a mortgage. This is a huge financial commitment that you should make sure you’re ready for so make sure it’s right for you.

A child holds a small wooden house in their hands

Beginners guide to mortgages

Posted on | by Neil Alexander

Getting a mortgage is probably the biggest financial commitment you will ever make. But if you’re a first-time buyer, you might not know where to start. Here we have outlined the main things you need to know about getting a mortgage.

What is a mortgage?

A mortgage is a large loan used to help buy property or land. This makes up the difference between the total cost of the property and the deposit (lump sum payment). Interest and mortgage fees will be added onto the cost of your mortgage for borrowing the money.

Mortgages are secured against the value of your house until it’s completely paid off. This means that if you fail to keep up with your repayments then your mortgage lender has the right to repossess the property to sell and get their money back.

Do I qualify for a mortgage?

You can get a mortgage if you’re 18 or older and in full-time employment. Most lenders will require that you’re no longer in your work probationary period and that you have a good credit score. However, there are still options available for people who have a poor credit history.

How much can I borrow?

The amount you can borrow is based on your yearly earnings; as well as your partner’s earnings if you’re taking out a joint mortgage. Our online tool can help you work out how much you can borrow if you’re unsure.

No mortgage provider will allow you to take out a mortgage that you can’t afford. The lender will also want to see at least 3 months’ worth of bank statements to determine how much you can borrow for a mortgage.

How big a deposit should I put down?

Although there isn’t a set amount that you have to put down as a deposit, most lenders require around 20% of the house’s value. For example, if you’re looking to purchase a £200,000 house, then you should look to put down a deposit of £20,000.

The bigger the deposit you put down, the cheaper your mortgage repayments will be as you will have a smaller mortgage to pay back.

Consider your LTV (Loan to Value)

A larger deposit will reduce your LTV (Loan to Value), allowing you to get a better deal. Your LTV is the size of your mortgage in relation to how much your property is worth. High LTV mortgages (above 80%) won’t guarantee the best interest rates as these are considered riskier for lenders.

If you’re in a position where you need to secure a high LTV then you’re more likely to get approved if you have good credit score.

How much will I pay each month?

Your monthly repayments will be based on a number of factors. This includes your LTV, the type of mortgage you take out and the length of the term:

Types of mortgages

Fixed rate mortgage – Where the interest rate stays the same for a set period of time, as do your monthly payments.

Variable rate mortgage – Where the interest is set at the lender’s SVR (Standard Variable Rate), considered as their basic mortgage.

Discount mortgage – This is the same as a variable rate mortgage but a reduction is applied for a certain length of time.

Tracker mortgage – This is similar to a variable rate mortgage but instead, they track a nominated interest rate, usually the Bank of England’s interest rate, rather than the lenders SVR.

Capped mortgage – This is also the same as a variable rate mortgage, however, the interest rate can never rise above a set “cap”.

Offset mortgage – These mortgages are linked to a savings account as well as your current account. Each month the lender will look at what you’ve put into savings and deduct this from what you owe on your mortgage.

Whichever type of mortgage you agree to, you will be contracted for a number of years before you are able to renew or remortgage by going elsewhere to get a better deal.

Mortgage term length

On average mortgages run for 25 years, but terms can be longer or shorter than this depending on your situation. As affordability is more prevalent with house prices increasing, many people are choosing mortgages with longer terms in order to get a lower monthly payment.

If affordability isn’t an issue for you then choosing a shorter term could be a better option as you will pay less in interest over time.

If necessary, you can extend or reduce your mortgage term; however, there may be an additional cost to this. You should always ensure that you can afford the change in monthly payments if you choose to change your term.

Applying for a mortgage

The process of applying for a mortgage is relatively straightforward. You will need to provide information about yourself as well as information about the property you are looking to purchase.

When applying for a mortgage you should avoid making multiple applications in a short period of time. This is because lenders will be able to see each of these on your credit file, suggesting that you might be desperate for finance.