PEOPLE will bad credit histories now have more choice when it comes to getting a mortgage as Virgin Money has opened up its range.
Until last month, Virgin Money had a blanket ban on offering mortgages to those who have had county court judgements (CCJs) made against them in the past.
Getty – Contributor Virgin Money has opened up its mortgages to people who have had CCJs
This happens when someone takes court action against you, saying you owe them money, and you do not respond.
Records of judgements are listed on your credit report for six years – unless you pay the full amount within a month – meaning you’re often blacklisted by lenders during this time.
But Virgin Money says it will now lend to people who have repaid – known as “satisfied” – CCJ’s of up to £500.
Virgin Money will also lend to people who have repaid debts of up to £500 or who have had debts of up to £2,000 that are more than three years old.
How to get a mortgage with a poor credit scoreIf you’re planning to buy a home, use an independent mortgage broker to ensure you get the best deal.
You should check that your broker will compare the whole of the market and ask what the fees will be – brokers, such as London & Country and Trussle, are free to use.
Don’t be tempted to start applying for mortgages with your bank or any other providers you can find.
A scattergun approach will only harm your chances of securing a mortgage, as potential lenders will check your credit file and each check that does not result in a successful mortgage application will lower your credit score.
Before going to a broker, you can use free eligibility tools to check your likelihood of getting a mortgage before applying, which means your credit score won’t be hit.
Comparethemarket has such a tool as has Experian – but be aware that they may not compare all the deals out there.
‘It’s encouraging to see’
Rachel Springall, an expert at comparison service Moneyfacts, says it’s good to see a big brand open up its mortgages to those with less than perfect credit scores.
She said: “Borrowers may not have the most immaculate credit ratings and so mortgages for those with a lack lustre financial footprint are vital.
“It is great to see such a recognised brand opening up their lending to those who have had CCJs against them or defaulted on previous loans.
“At the moment, building societies appear to lead the way in their underwriting processes to accommodate these types of borrowers, so it’s encouraging that more brands are reconsidering their lending criteria.”
How do Virgin Money’s mortgages compare?
But just because Virgin Money has started lending to people with poor credit scores doesn’t mean it’s best for you.
Always use a free whole of market mortgage broker to find the best deal for your circumstances.
Getty – Contributor Always use a free whole of market mortgage broker to find the best deal for you
Bear in mind that you shouldn’t just look at the rate, but also compare any fees as well as these can rack up.
That said, on rates alone, Virgin Money’s mortgages are competitive.
On variable mortgages for people who have paid off CCJs, Virgin Money’s 1.68 per cent rate can only be beaten by Yorkshire Building Society’s 1.41 per cent rate. Both are for borrowers with at least a 35 per cent deposit.
On two-year fixes, Virgin Money offers rates of 1.67 per cent for those with at least a 35 per cent deposit up to 2.99 per cent for those with at least a 5 per cent deposit.
While on five-year fixes, Virgin Money offers mortgages of between 2.01 per cent and 3.35 per cent for those with deposits of between 5 per cent and 35 per cent.
How to boost your credit score before applying for a mortgageFIRST ensure all of your payments are made on time – this includes anything from household bills to credit cards to loans.
Mortgage lenders take a dim view on late payments.
If you’ve got debts, look for ways to put money aside each month to help clear your debts.
If you’re struggling to meet your repayments, speak to your lenders – they may agree to a payment plan that sees the interest you owed suspended, providing you stick with the plan and make your payments in full and on time.Next check if your outgoings are lower than your income, and look for ways to cut your spending if it is too high.Finally, check your credit file to see what your score is. This means getting a free credit report from each of the three credit agencies – Experian, Equifax and Noddle – as you can’t tell which one a potential lender will use.
One rate alone, its two and five year fixes can only be beaten by Atom, Skipton and Yorkshire Building Society – although this will depend on how much you borrow.
Virgin Money still won’t lend if you’ve gone bankrupt of have an IVA
But bear in mind that Virgin Money still won’t lend to you if your CCJ hasn’t been repaid or if it’s more than £500 – even if it’s satisfied.
It also won’t lend to you if you’ve gone bankrupt, have an IVA or if you’re consistently behind on debt repayments.
In addition, it won’t give you a mortgage if have debts of between £500 and £2,000 or if you have debts of up to £2,000 that are less than three-years-old.
It also blanket bans people with debts of more than £2,000.
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We spoke to one family who got a mortgage despite being £50,000 in debt and having a bad credit score.
Here’s how you can do the same.
And if you’re struggling with debts, here are eight easy tips to reduce what you owe.
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