British Bank Launches New Mortgages for Those with Lower Credit Scores

1st Apr 2024

One of the most common misconceptions about credit scores is that if your credit score isn’t perfect, then you stand no chance of getting a mortgage. In the past it may well have been true that with a lower credit score, you may have a restricted choice of products compared with someone with a higher score.

Leeds Building Society is attempting to change the mortgage market in the UK and has recently unveiled its Reach mortgage range. This is a range of mortgage products specifically designed for people whose credit scores rule them out for Leeds standard mortgage offerings. These products are also aimed at people with smaller deposits, offering loan-to-value (LTV) options ranging from 80 to 95 percent. The range includes two, three, and five-year fixed-rate options, along with a selection of product fees. The ability to secure a mortgage or up to 95%, and to fix the rate for up to five years should make these new Reach mortgages attractive not only to those with lower credit sores, but also to first-time buyers.

Credit Referencing Agency Partnership

This move to support borrowers with lower credit scores in getting mortgage deals follows Leeds Building Society's collaboration with Experian Boost earlier this year. Experian, one of the largest credit referencing agencies in the UK and one of the companies which come up with credit scores. Boost is a service which is aimed to help people with lower credit scores increase their credit scores by demonstrating that they can manage regular expenses such as council tax or even their Netflix bill. Additionally, the building society introduced a Home Deposit Saver product, providing a £500 bonus to people who want to start putting regular savings in an account to save towards a deposit for their first property.

Options for Those with Lower Credit Scores

The Leeds Building Society mortgage is just one option of many for people who have less than perfect credit scores. Although the product will be suitable for many, the pricing is expected to be slightly higher than standard mortgage products to account for additional risks.

People who have less than perfect credit are usually advised to work with a mortgage broker or other expert to help them navigate the different products on the marker and work out which is most appropriate for them. Mortgage brokers will take a fee, but if they can find you the ideal product which you will be accepted for, they are worth the money.

The other option for people who have lower credit scores but who are thinking of buying a property in the future is to take steps to improve their credit score before applying for a mortgage. This might take several months or longer, but boosting your credit score might open up a wider choice of mortgage products, at better prices. Take time to consider all the options – the Leeds new product might be right for some first-time buyers, with others finding their ideal home through another method.