Is a mortgage broker better for people with adverse credit?

Home » Insight » UK Adverse Credit Mortgage » Is a mortgage broker better for people with adverse credit?

When it comes to securing a mortgage, especially with a poor credit history, the process can feel daunting. Many potential buyers in the UK find themselves asking whether using a mortgage broker is a better choice when dealing with adverse credit. The short answer is, yes. But why? Let’s break down how a mortgage broker can be your best ally when you have adverse credit.

Table of Contents hide

1 What is adverse credit?

2 Why adverse credit makes getting a mortgage challenging

3 The role of a mortgage broker in securing a mortgage with adverse credit

4 Are there drawbacks to using a mortgage broker?

5 How to choose the right mortgage broker for adverse credit

6 How to find a mortgage broker for adverse credit in the UK

7 Summary: Is a mortgage broker better for adverse credit?

8 FAQs

What is adverse credit?

Adverse credit, sometimes referred to as “bad credit” or “poor credit,” is a term used to describe a less-than-ideal credit history. This can be due to missed payments, defaults, CCJs (County Court Judgements), or even bankruptcy. When lenders review your credit score and see any of these issues, it can make obtaining a mortgage much more difficult or lead to less favourable terms.

In the UK, having adverse credit doesn’t automatically disqualify you from getting a mortgage, but it certainly limits your options.

Why adverse credit makes getting a mortgage challenging

Mortgage lenders in the UK assess your ability to repay the loan based on your credit history, among other factors. Adverse credit signals that you may be at a higher risk. Consequently, mainstream banks and high street lenders may either:

Reject your mortgage application outright.
Offer mortgages with higher interest rates.
Require a larger deposit.

For people facing these challenges, the solution could be working with a mortgage broker.

The role of a mortgage broker in securing a mortgage with adverse credit

A mortgage broker acts as a middleman between you and potential mortgage lenders. They help you find a mortgage deal that suits your circumstances, including those involving adverse credit. Here are a few reasons why using a mortgage broker may be better:

Access to specialist lenders: Many lenders that are open to offering mortgages to individuals with adverse credit don’t advertise their services directly to the public. These specialist lenders can only be accessed through mortgage brokers. A broker will have relationships with these lenders and understand their criteria, giving you access to deals that you may not find on your own.
Tailored advice:  A mortgage broker can provide expert advice tailored specifically to your situation. With adverse credit, understanding which lenders are more likely to accept your application is key. A broker can guide you through the options, potentially saving you time and disappointment from applying to lenders who are unlikely to approve your mortgage.
Better mortgage deals: Brokers often have access to exclusive deals that you won’t find on the high street or comparison websites. Even with adverse credit, they can help you secure better terms, such as lower interest rates or smaller deposits, than if you were to apply directly to lenders.
Saving time and reducing stress: Applying for a mortgage, especially with adverse credit, can be stressful and time-consuming. A mortgage broker does much of the legwork for you. They handle paperwork, liaise with lenders, and help ensure your application is as strong as possible. This reduces the likelihood of rejection and helps you avoid unnecessary damage to your credit score from multiple applications.
Improving your chances of approval : Brokers know the ins and outs of the mortgage market. They can help you understand what steps you need to take to improve your chances of approval. Whether that’s saving for a larger deposit, waiting for a credit issue to expire, or managing your finances differently, their advice can be invaluable in positioning you for success.

Don’t let bad credit hold you back

Find out how we can help you get a mortgage!

Contact us now

Are there drawbacks to using a mortgage broker?

While mortgage brokers offer significant benefits, it’s important to consider potential drawbacks:

Fees: Some mortgage brokers charge fees for their services, while others earn commissions from lenders. Be sure to ask about the fee structure upfront so there are no surprises.
Not all brokers have the same reach: While some brokers have access to a wide range of lenders, others may work with a smaller pool. It’s worth asking your broker about their network to ensure you’re getting access to the most suitable lenders for adverse credit mortgages.

How to choose the right mortgage broker for adverse credit

Choosing the right mortgage broker can make all the difference when you have adverse credit. Here are a few tips to help you find the right one:

Look for brokers specialising in adverse credit: Not all mortgage brokers specialise in helping people with poor credit. Be sure to ask about their experience working with clients in similar situations.
Check their credentials: In the UK, mortgage brokers must be authorised and regulated by the Financial Conduct Authority (FCA). Ensure that the broker you choose is fully accredited.
Read reviews: Many brokers have online reviews from past clients. Look for feedback from people who were in similar financial situations to yours.
Ask about fees: As mentioned earlier, be upfront about asking how the broker is paid. Some brokers charge a flat fee, while others receive a commission from the lender. Make sure you understand any costs before committing to a broker.

How to find a mortgage broker for adverse credit in the UK

Finding the right mortgage broker is key to securing a mortgage with adverse credit. Here are some tips on how to find a reputable broker:

Look for specialist adverse credit brokers

Not all brokers are equipped to deal with adverse credit cases. It’s essential to find a broker who specialises in working with clients with poor credit. These brokers will have a deeper understanding of your needs and will be familiar with lenders who are open to working with people in similar situations.

Check their credentials

In the UK, mortgage brokers must be regulated by the Financial Conduct Authority (FCA). Always ensure that the broker you choose is FCA-authorised. You can check their credentials on the FCA’s Financial Services Register to ensure they are legitimate.

Ask for recommendations

Word of mouth can be a powerful tool when finding a broker. Ask friends, family, or colleagues if they have any recommendations for brokers who have experience with adverse credit. Alternatively, online reviews and forums can be a good place to start when researching different brokers.

Compare fees

Some mortgage brokers charge a fee for their services, while others are paid by the lender. Make sure you understand how the broker charges before you commit to working with them. While it may be tempting to choose a broker with no upfront fees, those who charge might offer more comprehensive services, especially when dealing with adverse credit.

Check their track record

When dealing with adverse credit, you want a broker with a proven track record of success. Don’t be afraid to ask about their experience with similar clients and what kinds of mortgage deals they’ve been able to secure for those with poor credit histories.

Consider independent brokers

Independent mortgage brokers can offer products from the entire market, whereas tied brokers may only be able to access a limited number of lenders. An independent broker specialising in adverse credit will have more options available to them, increasing your chances of finding the right mortgage for your circumstances.

Summary: Is a mortgage broker better for adverse credit?

If you’re dealing with adverse credit, using a mortgage broker is almost certainly a better option than going it alone. Their specialised knowledge, access to niche lenders, and ability to offer tailored advice can significantly improve your chances of securing a mortgage that works for you.

In the UK, where the mortgage market can be complex, having expert guidance is invaluable, particularly when your credit history isn’t perfect. A good mortgage broker will help navigate the tricky waters of adverse credit, allowing you to find the right mortgage solution for your needs.

Remember, securing a mortgage with adverse credit isn’t impossible, but it does require expert help. A mortgage broker can be the key to unlocking your path to homeownership.

FAQs

Can I get a mortgage with adverse credit?

Yes, it is possible to get a mortgage with adverse credit, although it may be more challenging. Many high street lenders might reject applications, but specialist lenders are more willing to work with people who have bad credit. A mortgage broker with experience in adverse credit can help you find these lenders.

Is a mortgage broker better if I have adverse credit?

Yes, a mortgage broker is often a better option if you have adverse credit. They have access to a broader range of lenders, including those that specialise in working with people who have poor credit histories. Brokers can also offer tailored advice and increase your chances of getting approved for a mortgage.

How much does a mortgage broker for adverse credit costs?

The fees for mortgage brokers can vary. Some brokers charge a fixed fee for their services, while others are paid a commission by the lender. Be sure to ask your broker upfront about their fees, especially if they specialise in adverse credit cases, as their services may cost more due to the complexity of your situation.

Will using a broker improve my chances of getting a mortgage?

Yes, using a broker can improve your chances of getting a mortgage, especially if you have adverse credit. A broker knows which lenders are more likely to accept applications from people with bad credit, helping you avoid unnecessary rejections that could further harm your credit score.

Do mortgage brokers work with all lenders?

Not all brokers work with every lender. Some are tied to specific lenders or networks, while others are independent and can search the entire market. It’s best to use an independent mortgage broker if you have adverse credit, as they can offer access to a wider range of mortgage products.

How do I find a mortgage broker that specialises in adverse credit?

To find a mortgage broker who specialises in adverse credit, look for brokers with experience in this area, check online reviews, and ask for recommendations. Ensure the broker is regulated by the Financial Conduct Authority (FCA) and has a track record of successfully helping clients with poor credit.

Will applying for a mortgage hurt my credit score further?

Every time you apply for credit, including a mortgage, a lender will perform a hard inquiry on your credit report, which can negatively affect your credit score if done multiple times. A broker can help minimise the number of applications by submitting your details only to lenders most likely to approve your mortgage.

How long does it take to get a mortgage with adverse credit?

The process of securing a mortgage with adverse credit can take longer than usual, as specialist lenders may require more detailed information. However, a mortgage broker can help streamline the process by guiding you through the paperwork and negotiating with lenders on your behalf.

Can I improve my chances of getting a mortgage with adverse credit?

Yes, you can improve your chances by saving for a larger deposit, paying off outstanding debts, and working with a mortgage broker who specialises in adverse credit. They can advise on what steps to take and which lenders are more likely to approve your application.

Continue Reading