Can I Get a Mortgage with Bad Credit?

March 30, 2023
first time buyer couple

Bad Credit History & Mortgages

If you’re one of the many people in the UK with a history of bad or adverse credit, you may automatically assume that you’ll be unable to find a mortgage.

Whilst it can be harder to find the right mortgage product, it’s certainly not impossible.

Can I get a Mortgage with Bad Credit?

Yes! Both we & lenders appreciate that not everybody has a perfect credit history. We’ve helped clients get a mortgage with one or more of the following credit issues:

  • No Credit History
  • Late Payments
  • Defaults & IVA’s
  • CCJ’s (County Court Judgements)
  • Debt Management Plans

Although Bad Credit can make some lenders feel hesitant about lending, we at The Mortgage Centre have access to lenders that have criteria more open to accepting applicants with a poor credit history.

What is a Bad Credit Mortgage?

These types of mortgage agreements carry more risk to the lender who could lose money if you were to become unable to repay your mortgage. Lenders that accept bad credit can charge higher levels of interest.

People who take out mortgages with a higher interest rate do so with the aim of switching to a cheaper deal in the future with a remortgage, once their credit score and report has improved.

Where can I access my Credit Report?

We at The Mortgage Centre recommend using Check My File. This collates the data from the 3 main Credit Reference agencies that lenders use (Experian, Equifax & TransUnion).

What can be seen on My Credit Report?

  • Your current level of debt & available credit. Using more than 50% of your available credit will generally negatively impact your credit score.
  • Your repayment history, including whether you have made payments on time. Late payments will be seen as negative & reduce your credit score.
  • If you have a bankruptcy, Individual Voluntary Arrangement (IVA), Debt Relief Order (DRO), or Debt Management Plan (DMP) on you credit record, how long it has been on there & whether it has been discharged.
  • Whether you have any County Court Judgements (CCJ’s) against your name & how long ago these were issued.
  • The number of credit applications you have made & over what period.

How far back do lenders look?

Your credit report goes back in time 6 years in total and mortgage lenders will usually use all of this information when considering an application

How can I improve my Credit Score?

There are some steps that you can take to improve your Credit Score inc

  • Registering to vote on the Electoral Roll
  • Managing your available credit carefully
  • Closing inactive accounts
  • Paying bills on time
  • Fix any errors on your credit report.

How much deposit do I need when applying for a mortgage with poor credit history?

Some lenders, especially for mortgages with poor credit history can set minimum deposit requirements to further reduce their risk.

A borrower with bad credit history may be expected to provide a larger chunk of the property’s value upfront.

Having a larger deposit can open your choice of lenders & means you borrow less. Though, we understand that this isn’t always possible.

Every Lender & every situation is different, which is why we recommend getting advice to explore all your options & find the best mortgage for you.

The Mortgage Centre has access to both mainstream lenders and specialist bad credit mortgage lenders. This means that we can help you to find the right product, no matter your credit rating or credit history

 

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