Mortgages when your credit file is not perfect.

What counts as adverse credit

More things than most people expect, and several of them feel unfair. A county court judgment, whether or not you have since paid it. A default, which is simply an account the lender closed as unpaid. Arrears on a mortgage, a car loan, a card, or occasionally a phone contract. A debt management plan, running or finished. An individual voluntary arrangement. A discharged bankruptcy. Sometimes a payday loan taken out years ago, even though it was repaid on time.

Two things matter far more than the label: how long ago it happened, and how large it was relative to your income. A satisfied CCJ for £300 from five years ago is a different conversation to £12,000 of arrears last spring, and lenders price that difference very differently.

The two most common entries have a page each, because the detail genuinely differs: a mortgage with a CCJ, where the date it was issued and whether you paid inside the first month change everything, and a mortgage with defaults, where the clock starts on a date most people get wrong.

Why the high street says no and someone else may say yes

Mainstream lenders often use automated systems and credit-scoring models to assess mortgage applications. These work well for many straightforward cases, but an application involving adverse credit may not fit a lender's criteria.

That does not mean every mainstream lender will say no, or that every declined application is decided by a computer. Each lender has its own approach, and some cases may receive further review.

Specialist lenders may consider circumstances that fall outside mainstream criteria. Depending on the lender, they may take account of factors such as when the problem occurred, its cause, whether the debt has been settled and how your finances have been managed since.

The trade-off is that rates, fees and deposit requirements may be less favourable than those available on standard products. Some specialist lenders also work exclusively through mortgage intermediaries rather than directly with borrowers.

That is where a broker can help: by understanding your circumstances, checking relevant lender criteria and identifying which options may be worth exploring before you apply.

What it is likely to cost you

Usually a larger deposit and a higher rate than the adverts you see, though rarely as bad as people fear. How much worse depends on how recent the problem is. The useful thing is that it is not permanent: most adverse entries drop off your file six years after they were registered, and a couple of years of clean payment history often moves you back towards mainstream pricing. Many of my clients plan from the start to remortgage once the entries have aged — whether that works depends on how the file looks by then — and it is very much the plan rather than a happy accident.