Falling behind on unsecured loan payments such as credit cards or personal loans will likely impact the chances of being accepted for a mortgage with a high street lender. But having unsecured arrears on your profile won’t stop your chances altogether.
Lenders have a variety of criteria when they’re looking at mortgage applications. And each lender’s criteria are different.
The key to a successful mortgage application, even if you have unsecured arrears, is understanding which lender is likely to accept them, and understanding the criteria for their application process.
At Adverse Mortgage Advisors our years of experience combined with in depth knowledge of the lenders that accept applications where there’s a poor credit history gives you a far better chance of being accepted.
Our expertise is such that we’ll only match you with a lender who is the most likely to accept your application, even if your credit history is less than perfect.
Unsecured credit is where no collateral is used to support the loan. With a secured loan such as a mortgage, for example, if you are unable to pay it off your house can be repossessed. If you default on an unsecured loan, your assets aren’t at risk.
However, creditors can still register defaults against you or even apply to the court to issue you with a County Court Judgement (CCJ) to get their payment. These things will negatively affect your credit rating.
With secured arrears, your house, car or other major assets can be taken by the creditors to pay off the debt if you no longer have the ability to pay.
When getting a mortgage with arrears on your profile, it’s the type of arrears as well as the recency of the problem that lenders will be most interested in. More recent arrears are seen as a bigger problem and will reduce the selection of lenders and restrict the amount you can borrow.
To lenders who specialise in adverse credit lending, secured arrears are usually seen as more severe than unsecured arrears.
With Adverse Mortgage Advisors it’s our understanding on lender selection and their specific application process that’s key. We find lenders willing to help you based on your financial circumstances. This means less chance of a rejected application.
The types of loans which don’t usually require collateral as security, and therefore won’t put your assets at risk, are the following:
Most lenders will insist that any current arrears for any commitments are brought up to date before they will consider your mortgage application. This is because they want to see you are on top of your finances and appear less risky to lend to.
It’s important to make sure your accounts are up to date before you start your application. Doing this will also allow for a quicker turnaround and prevent any potential delays.
Improve Your Chances of Getting Accepted with Unsecured Arrears
With our access to specialist lenders, and our understanding of their criteria, using our broker service will give you a better chance of success of getting an application accepted.
We can provide further advice to increase your chances of success. If you have unsecured arrears and you want to apply for a mortgage, speaking with our brokers, who specialise in adverse credit will give you a better chance at finding a suitable lender. Our advisors have the experience, knowledge and understand the requirements of each lender, to give your application a better chance.
If you have questions about getting a mortgage with an adverse credit score, read our FAQs. Our wealth of knowledge within this market means that we’re confident in our ability to offer specialist mortgage advice and secure the mortgage you want regardless of your credit history.