Adverse Credit Mortgage Criteria Eased by Hinckley & Rugby

by | Wednesday 19th Jun 2024 | Mortgage News

H&R Building Society Ease Their Adverse Credit Mortgage Criteria

H&R Building Society Ease Their Adverse Credit Mortgage Criteria

In a significant move to make homeownership more accessible to different types of borrowers, Hinckley & Rugby for Intermediaries has announced relaxed criteria on its Credit Flex adverse credit mortgage product, designed for borrowers with adverse credit histories. This strategic change aims to broaden the range of eligible applicants and simplify the underwriting process, potentially offering a lifeline to those with financial difficulties. In this article we will explore what these now changes are, and what they could mean for credit impaired borrowers looking to get a mortgage in 2024.

Expanded Eligibility for Borrowers Needing An Adverse Credit Mortgage

In a communication sent out to brokers today, H&R Building Society have announced that they will be easing their criteria when it comes to clients with adverse credit. Something that they were very hard-line on before. The revised criteria apply to various forms of adverse credit, including county court judgments (CCJs), debt management plans (DMPs), individual voluntary arrangements (IVAs), payday loans, and missed payments on utility bills, credit cards, mortgages, or secured loans. The building society’s broker-only arm highlights that these amendments not only simplify the underwriting requirements but also extend the criteria to cover a wider range of borrowers.

Key Changes To The Credit Flex Mortgage Product

  • Credit Card, Current Account, Utility Payments: Borrowers who were up to three months late with payments over the previous 12 months are now accepted if they were up to five months late.
  • Payday Loans: The waiting period for borrowers who have taken out payday loans has been reduced from 12 months to six months.
  • Mortgage Payments: Borrowers who were up to two months late with repayments over the past two years are now considered, compared to the previous limit of one month later.
  • County Court Judgements: The acceptance criteria have expanded from one judgment allowed in the prior two-year period, up to the value of £250, to two judgments over a three-year period, with a total value of £500.

Understanding Adverse Credit In Mortgage Applications

Adverse credit, commonly referred to as “bad credit,” encompasses a range of financial issues that indicate a borrower may have struggled to manage debt responsibly. This can include missed payments on various accounts, defaults, CCJs, DMPs, IVAs, payday loans, and even bankruptcies. These credit issues can significantly impact a borrower’s ability to secure a mortgage, as lenders perceive them as higher risk. Unfortunately most ‘high-street’ banks will not accept very much (if any) adverse credit history. Meaning that in most cases, to get the lower rates and more competitive mortgage products with high-street banks, you will need to have a clean credit file.

While the recent changes by Hinckley & Rugby Building Society offer more flexibility, there are still certain types of adverse credit that can make obtaining a mortgage particularly challenging. For instance, a recent bankruptcy is a severe mark against a borrower’s creditworthiness and typically precludes them from securing a mortgage until a significant period has passed and credit has been rebuilt. Multiple and/or recent defaults on credit or missed payments can also prevent you from getting a mortgage.

Adverse Credit With Expert Mortgage Advice

For borrowers with adverse credit histories, getting a mortgage can be daunting. This is where a whole-of-market mortgage broker, such as Oportfolio, can be invaluable. Brokers with access to the entire market can assess an individual’s unique financial situation and identify lenders that are more likely to approve their application, despite past credit issues.

An experienced mortgage broker can provide personalised advice and leverage their relationships with a variety of lenders to find the best possible mortgage deals. This tailored approach can be particularly beneficial for those who have been turned away by mainstream lenders or are unsure about their eligibility due to past credit problems. Of course, adverse credit mortgages are not the ideal scenario as rates can be higher, but it may be the case that you need one to initially get on the property ladder. And then further down the line, when your credit has improved, you may be able to move to a high street lender.

Why Hinckley & Rugby Made These Changes To Mortgages For Adverse Credit

Hinckley & Rugby’s decision to relax its criteria likely stems from a desire to capture a larger segment of the mortgage market in a stagnating mortgage environment, and support those who have faced financial difficulties. As interest rates are high and property values are staying put, many people who would have got a mortgage are staying put. By extending their criteria, they not only increase their potential customer base but also position themselves as a more inclusive lender. This move could be seen as part of a broader industry trend towards more flexible and understanding lending practices in response to the diverse financial backgrounds of modern borrowers.

Speak To A Mortgage Broker Today

Hinckley & Rugby Building Society’s new criteria for adverse credit mortgages opens up new opportunities for many people with less-than-perfect credit histories. With the right guidance from a knowledgeable broker, such as ourselves at Oportfolio, prospective homeowners can find viable paths to securing a mortgage and achieving their dream of homeownership, even in the face of past financial challenges. Call or message out team today to see how we might be able to help you.

We're Here to Help

If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

As featured in

Understanding a Volatile Mortgage Market eBook

Download Our eBook

Join our mailing list and receive a link to our latest ebook, Understanding a Volatile Mortgage Market. 23 pages of practical insights to navigate the unpredictable mortgage landscape.

You Will Receive A Link To Your eBook Shortly!