To apply for a home loan with bad credit, a specialist mortgage broker would be your safest option. They can provide advice and support on the best lender for you based on your credit history. The brokers will use your credit file to determine how much of a risk you pose to lenders. Your risk is determined by the type of bad credit you have had and how much time has passed since it was registered. You can offset some risk by providing a bigger deposit, paying off any unsettled debts and by trying to improve your credit score as a whole.
Some credit issues are considered more serious than others and those with multiple credit issues may need to provide a bigger deposit to be deemed less of a risk. The tables below will help you to understand how lenders will view your credit history:
Secured lending (lending is secured against assets or a property)
| Credit issue | Approved after 0-12 months? | Approved after 1-2 years? | Approved after 2-3 years? | Approved after 3-4 years? | Approved after 4+ years? |
| CCJS | Possible | Maybe (with a good LTV) | Yes (any number) | Yes (any number) | Yes (any number) |
| Defaults | Possible | Maybe (with a good LTV) | Yes (any number) | Yes (any number) | Yes (any number) |
| Mortgage arrears | Yes (max 3 late payments) | Yes (any number) | Yes (any number) | Yes (any number) | Yes (any number) |
| Repossessions | Unlikely | Yes (25% deposit) | Yes (25% deposit) | Yes | Yes |
Unsecured lending (lending is not secured against assets or property)
| 0-12 months | 1-2 years | 2-3 years | 3-4 years | 4+ years | |
| CCJs | Yes (any number) | Yes (any number) | Yes (any number) | Yes (any number) | Yes (any number) |
| Defaults | Yes (any number) | Yes (any number) | Yes (any number) | Yes (any number) | Yes (any number) |
| Debt management | Yes (if credit report is unaffected) | Yes (if credit report is unaffected) | Yes (if credit report is unaffected) | Yes (if credit report is unaffected) | Yes (if credit report is unaffected) |
| Late payments | Yes (any number) | Yes (any number) | Yes (any number) | Yes (any number) | Yes (any number) |
| IVA | Possible with 25% deposit | Possible with 25% deposit | Possible with 15% deposit | Possible with 15% deposit | Possible with 10% deposit |
| Bankruptcy | Possible with 25% deposit | Possible with 25% deposit | Possible with 15% deposit | Possible with 5% deposit | Possible with 5% deposit |
There are many factors a lender considers before they give you a formal mortgage offer. Your credit history is examined of course but so is your affordability, deposit and the type of property you are looking to use the mortgage for. If you are looking for a home loan with bad credit a mortgage specialist will assess your situation for you before you make a formal application.
The first thing our bad credit mortgage brokers will ask you for is copies of your credit report. We recommend you download your report from the three main credit reference agencies TransUnion, Experian and Equifax. You can check them to see where you stand with your bad credit, but also to make sure all your information is up to date and there are no inaccuracies. If there are any mistakes you can get in touch with the company who made the error and get it corrected as soon as possible.
Our mortgage brokers will then do an affordability assessment for you and evaluate your income and expenditure. They will assess your income, debts, monthly commitments, age and dependents to find a mortgage that is affordable for you.
The size of your deposit will impact your choice of mortgage lenders significantly when you have a history of adverse credit. If you can provide a larger deposit some of the risks your bad credit creates could be offset as you would need less of a loan.
There is not a single lender out there who is the best at providing home loans for bad credit as each situation is different. To find the best lender who suits your bad credit you will need a mortgage broker with lots of experience.
Here is a checklist of what to look out for in a bad credit mortgage broker:
It is also important to note what to be cautious of too:
At MoneyNest we only provide qualified brokers who have the skills to match you with lenders who could support your application. Our mortgage superheroes have access to the whole of market which allows more choice in finding a lender to offer more flexibility to your bad credit. We always strive to give high levels of customer service and pride ourselves on the results we deliver. To find out how we can help you today follow the links below to get in touch. Our superheroes are ready and waiting!
If your credit issues are holding you back, our credit expert hero’s are here to set you free!
