Bad Credit Best Buys
Following the sub-prime crisis in August 2007 and full blown effects of the credit crunch that culminated in the collapse of several lenders, there are now very few options for those with an adverse credit history. Specialist lenders such as GMAC, Kensington, SPML, Future Mortgages, Mortgages PLC, Rooftop & First National are no longer lending and there are only a small number of niche lenders left in the market but in view of this, criteria is tight and larger deposits are required.
With high street lenders significantly tightening their credit scoring models, there are a few lenders now offering ‘Almost Prime / Prime Plus’ products which ignore missed & late payments on unsecured credit and will allow defaults whether satisfied or not. However, if you have more than £500 registered in CCJ’s within the last 2-3 years then you will need at least 35% deposit or equity within your property and expect to pay extremely high rates of interest.
Lenders within the 'bad credit' mortgage arena will usually 'pigeon hole' you into a specific product dependant on the level of bad credit registered against you. These can range from the following but some of these products will require at least 50% deposit or equity:
- Near Prime allows a maximum of £1500 in CCJ's (satisfied or not), unlimited defaults, a maximum of 2 months mortgage arrears within the last 12 months, bankruptcy or IVA discharged at least 3 years ago and even a repossession if at least 3 years ago.
- Light Adverse allows upto a maximum of £4000 in CCJ's (satisfied or not), unlimited defaults & a maximum of 3 months mortgage arrears within the last 12 months. bankruptcy or IVA discharged at least 12 months ago and even a repossession if at least 2 years ago.
- Medium Adverse allows upto a maximum of £6,000 in CCJ's (satisfied or not), unlimited defaults, a maximum of 3 months arrears within the last 12 months. Day 1 discharged bankruptcy and current IVA's as long as satisfactorily conducted and even a repossession if at least 2 years ago.
- Heavy / Unlimited Adverse allows any amount of CCJ's, arrears etc. Typically the rate you pay will be tailored towards the amount of bad credit information that is recorded against you but expect to pay 11.5% as a discounted variable rate.
The below tables shows the top products available (as at 17/07/09) using a 'True Cost Comparison' over a 2 year period. For comparison purposes, we have used a loan amount of £75,000 over 25 years on a capital and interest repayment basis and assumed a property value of at least £150,000.
We recommend using a true cost analysis as this is the sum total (over the 2 year period) of monthly payments, arrangement fees and valuation costs and this enables us to compare different benefits offered by lender's schemes fairly against each other.
<£500 in CCJ’s but registered more than 3 years old and no other adverse
| Lender | Initial Rate | Variable Rate | APR | True Cost | Fees & Incentives | Early Redemption Charge | Monthly Cost |
| Tracker (<65% loan to value) | 4.3% | 4.3% | 4.9% | £13,146 (excl ERC) |
£3004 (£2605 can be added) | 5% of loan in year 1, 4% of loan in year 2, 3% of loan in year 3. | £422.59 |
| Fixed (<65% loan to value) | 5.75%2 Years | 3.3% | 4.2% | £13,858 | £2254 (£1855 can be added) | 7% of loan within 2 years. | £483.50 then £382.61 |
| Tracker (<75% loan to value) | 4.6% | 4.6% | 5.2% | £13,462 (excl ERC) | £3004 (£2605 can be added) | 5% of loan in year 1, 4% of loan in year 2, 3% of loan in year 3. | £435.77 |
| Fixed (<75% loan to value) | 6.2% 2 Years |
3.6% | 4.5% | £14,422 | £2254 (£1855 can be added) | 7% of loan within 2 years. | £506.99 then £395.36 |
| Lender | Initial Rate | Variable Rate | APR | True Cost | Fees & Incentives | Early Redemption Charge | Monthly Cost |
| Fixed | 8.15% 31/7/11 |
4.25% | 5.4% | £16,295 | £2220 (£1895 can be added) | 6% of loan until 31/7/2011. | £601.15 then £424.65 |
| Lender | Initial Rate | Variable Rate | APR | True Cost | Fees & Incentives | Early Redemption Charge | Monthly Cost |
| Fixed | 8.45% 31/7/11 |
4.75% | 5.9% | £16,677 | £2220 (£1895 can be added) | 6% of loan until 31/7/2011. | £616.59 then £446.07 |
| Lender | Initial Rate | Variable Rate | APR | True Cost | Fees & Incentives | Early Redemption Charge | Monthly Cost |
| Fixed | 8.65% 31/7/11 |
5.25% | 6.4% | £16,949 | £2220 (£1895 can be added) | 6% of loan until 31/7/2011. | £626.97 then £467.88 |
Heavy / Unlimited Adverse Deals
| Lender | Initial Rate | Variable Rate | APR | True Cost | Fees & Incentives | Early Redemption Charge | Monthly Cost |
| Discount | 10.5% 1 year |
12.5% | 13.4% | £20,985 | £2170 (can be added) | 8% of loan within 3 years, 5% in year 4, 4% in year 5, 3% in year 6, 2% in year 7, 1% in year 8. | £728.63 then £839.29. |
Whilst great care has been taken in compiling these tables, no liability can be accepted by Mosaic Mortgages as all rates and conditions should be checked before finalising any arrangements. Furthermore, these tables do not constitute an offer of advance nor does it in any way bind any particular lender to make an advance. The tables are for illustrative purposes only and this does not constitute as the 'Full advice and Recommendation' service offered by Mosaic Mortgages as specified by the Financial Services Authority.
If you would like to calculate the monthly payment for your specific circumstances then click here to use our interactive mortgage calculator or alternatively:
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Call us now on 01423 877260 |
The overall cost for comparison is 6.9% APR. The actual rate will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Our charges are usually £495.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Mosaic Mortgages is a trading name of Mosaic Mortgage Management Limited. Mosaic Mortgage Management is regulated by the Financial Services Authority under registration number 300398. Head Office: 2nd Floor, Harrogate House, 33-35 Parliament Street, Harrogate, North Yorkshire, HG1 2AS. Telephone 0845 3456744.