Contractor Mortgage Bad Credit
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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Contractor Mortgage Bad Credit
David Sharpstone talks us through getting a mortgage with bad credit as a contractor.
Podcast above approved by The Openwork Partnership on 09/04/2024.
CIS Mortgage Advice is a trade name of Just Mortgages Direct Limited, which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited, which is authorised and regulated by the Financial Conduct Authority.
Can I get a mortgage with bad credit as a contractor?
We’ve got two elements here. We’ve got the contractor element – which we covered that off in detail in our last episode. There’s lots of mortgage lenders that support contractors now.
Of those mortgage lenders that are quite good with contractors, we can then narrow down that field to look at lenders that are equally as good with accepting less than perfect credit records. That could be a CCJ, a default or an IVA.
Quite simply, yes, there are options available. Most of the time they would be from mortgage lenders that the general public have probably never heard of.
Are there many bad credit mortgage lenders for contractors?
I would say that all the mortgage lenders for bad credit would all consider contractors. No lenders exclude contractors, but not every mortgage lender will lend to somebody with bad credit.
In actual fact, most of the high street lenders won’t take on people with bad credit unless it’s very old and not that severe.
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Can I be declined a mortgage as a contractor?
Yes, absolutely, but you might not necessarily be declined because of the adverse credit. It could be because your status as a contractor doesn’t meet the lender’s criteria.
If last week you were selling ice creams and this week you’ve decided to get a contract as an engineer, a mortgage lender won’t look at that. You could also be declined if your adverse credit doesn’t meet a mortgage lender’s chosen risk profile.
They will want to know what happened, when it happened and why. Sometimes they want to know what you have done about it. Most lenders dealing with adverse credit aren’t necessarily ‘computer says no’ businesses. They’ll take more of a human approach, but they will want to feel that if you have got into a bit of a financial pickle before, it’s unlikely to happen again.
If somebody has repeatedly been lax about paying things and there’s no good reason why, they’re probably unlikely to lend. If you default on your mortgage they will end up repossessing the property – and they don’t want to do that.
How do I improve my credit score or rating before getting a mortgage as a contractor?
There are various things that will improve your credit score. Make sure you’re on the voters register and check your credit file – Checkmyfile.com lets you look at Equifax, Experian and TransUnion combined. A lot of lenders now use multiple searches from different agencies, so make sure the information there is correct.
Check it’s not pulling through information that doesn’t relate to you. If there’s information from previous relationships you can be dissociated by writing to the credit reference agencies.
Sometimes there are small things on your credit file that can give you a CCJ. It costs more money to fight it, so sometimes you just have to let it go. But even so, if you’ve got a £20 unsatisfied default, do pay it off because there is a huge difference between mortgage lenders that will consider a satisfied default and those that accept one that is unsatisfied.
Sometimes you just have to swallow it, even if you feel it’s a real injustice. It happens a lot, especially with mobile phone companies, who will slap a CCJ or default on you for a contract that you cancelled within their terms and conditions.
Remember that time heals all. The longer ago a default, CCJ, bankruptcy or IVA is registered on your credit file, the more likely it is that a mortgage lender will accept you. After six years, the details drop off. With bankruptcy you do have to disclose it, even after it’s dropped off your credit file, and the same goes for repossessions.
How do I apply for a mortgage with bad credit as a contractor?
As I always say, speak to a broker. These aren’t simple, vanilla mortgages to deal with. With contractors there are already so many ins and outs that mortgage lenders need to know.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
CIS Mortgage Advice is a trade name of Just Mortgages Direct Limited, which is an appointed representative of The Openwork Partnership, a trading style of Openwork Limited, which is authorised and regulated by the Financial Conduct Authority.
Approved by The Openwork Partnership on 09/04/2024.
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