It is still a possibility to get approved for a mortgage with bad credit, you just need the right guidance. It can still be difficult to find which is why we always recommend you use an experienced broker with access to the whole of the market like our specialists here at MoneyNest. This will improve your chances significantly as our experts will know how to handle the type of bad credit you have and what lender may be willing to accept you.
If you go straight to a mainstream lender you could be declined straight away as they may not have the experience to support bad credit mortgages as high street lenders are typically the most cautious and least flexible. It might be tempting to carry on applying for mortgages with multiple lenders until you receive approval but this will only cause your credit report further damage and reduces your chances of getting a mortgage any time soon. We recommend using a broker as your first point of call to eliminate that risk. Our mortgage superheroes will show you why it is much better to be selective with your application.
Your past credit history is so important as it gives any new lenders an indication on how responsible you would be with new loans that they may offer you. Your credit report shows any financial agreements you have had in the past with companies who allowed you to borrow money and pay it back in monthly instalments. There will be a history of each payment you have made for these agreements including any that have been late or missed.
Your report will also provide your basic information such as your full name, address history, birth date as well as a timeline of when accounts have been opened and closed and if any hard or soft searches have been conducted. Your credit report can be viewed by anyone considering offering you a form of credit so it is important to note that all bad credit will be visible. If you do not declare all major credit issues before an application the lender could decline you straight away once they discover it.
We recommend you download your credit files from the three main credit reference agencies used by lenders in the UK; TransUnion, Exquifax and Experian. They will provide you with a score that will give an indication as to where your credit stands. In general, the lower the score the higher the risk you are to a lender. But this does not mean that mortgage approval is not a possibility you will need to be matched with a lender who offers more flexibility to bad credit.
It is impossible to say exactly what types of bad credit lenders will or will not accept as each lender will have its own policy and criteria for you to meet. However, some bad credit is viewed as more severe than others. For example, a history of bankruptcy will be much more of a risk to the lender than a few missed mobile phone payments. The amount of time that has passed since your bad credit was registered will also impact acceptance from the lender as generally the more time that has passed the better, particularly if you have maintained a good report since. But bad credit will stay on your file for 6+ years so it is important you make your best effort to meet as much of the lender’s other criteria as possible.
Your credit report is only one piece of the application puzzle as lenders will look into your affordability, employment status, dependents, debts, monthly commitments and the type of property you need the mortgage for. Lenders will be happier if they have evidence to show you have tried to improve your credit score as much as possible, by keeping up to date with all existing payments, satisfying debts and generally managing your finances well.
If you have bad credit you are deemed a bigger risk to the lender, so by providing as much of a deposit as possible you can offset some of that risk. The deposit amount will be subject to your circumstances and what your bad credit looks like.
If you use a specialist whole of market broker like our superheroes you may have access to mortgages with a loan to value (LTV) of 90-95% if your bad credit issues are considered minor, such as missed phone bill payments, providing you meet the lender’s other eligibility criteria.
But it is likely you will struggle to find a mortgage with such a high LTV if you have a more severe credit history which includes bankruptcies and repossessions, particularly if they are less than 3 years old.
A deposit that large will certainly help you find a mortgage with bad credit – putting down a substantial lump sum offsets some risk to the lender which is often enough for many to consider a wide range of credit issues. Again, it depends on what the issue is and when it was. You will of course still be subject to affordability checks and the lender’s other criteria.
At MoneyNest we specialise in securing mortgages for bad credit. We know taking the steps to apply for a mortgage can be daunting when you have a history of adverse credit or have even experienced rejections before. But our mortgage superheroes are here to advise you on the best solution tailored to you. They understand the obstacles that bad credit brings as they have helped many customers in the same position as you.
Get in touch today by following the links below. We have the knowledge, time and skills to help you get approved for a mortgage with bad credit
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