I have bad credit; can I get a mortgage?
It can feel impossible to secure a mortgage with bad credit, but there are lenders out there who are willing to accept your application if you meet their criteria. If you are successful you can use the mortgage to buy your first home, move and even remortgage your current property.
If you have been rejected for credit in the past it does not automatically mean you have bad credit as different lenders will have different criteria for you to meet. Bad credit is a term used to describe a poor credit history that could have occurred due to the following:
Your credit report will keep an electronic record of your financial history good or bad. Future lenders will use it as a tool to determine if you are eligible for lending. Bad credit will mean you may struggle to find new borrowing as the lenders will view you as a bigger risk compared to someone with a clean credit report. They may assume you will fail to meet your new financial commitment if you have a history of failing to do so.
When you apply for a mortgage, lenders will check your credit report but will need to understand your income, monthly outgoings and general financial situation as a whole. They need to determine if you can keep up with monthly payments for the mortgage even if interest rates were to jump up. This process can be a lot trickier when dealing with a history of bad credit so we recommend you use a bad credit mortgage specialist like one of our superheroes. They know exactly how to handle the complexities that come with bad credit and therefore will be able to support you in getting a mortgage.
There is not one specific mortgage out there for bad credit as it is instead a smaller pool of lenders willing to offer flexibility providing you meet their other criteria. Your bad credit does make you a higher risk to the lender so they will examine your application with caution. In particular, they will have most interest in the type of bad credit you have and when it occurred.
If you are successful in getting a mortgage with bad credit there is a chance you will have to pay higher rates compared to someone with clean credit due to the higher risk you pose to the lender. Our bad credit mortgage specialists will search the market for the most suitable and affordable option for you.
Your credit report will give lenders an indication of your borrowing history but that alone will not be what determines the size of the loan they offer you. Many other factors such as income, age, employment status, outgoings, and debts will all play a part in the lender’s evaluation of your case. They will need to know that you can afford your mortgage payments as well as your existing commitments whilst maintaining the same quality of life. If the lenders deem the mortgage as unaffordable they will not be able to approve it without something changing like your deposit, income or commitments. Mortgages in general do not offer a one size fits all approach, especially not if you have bad credit. So, using a bad credit broker will improve your chances significantly. Follow the links below to get in touch and let our superheroes help you today!
Different lenders have different criteria you will need to meet. But to improve your chances of getting a mortgage with bad credit we recommend you look into your report and work on ways to improve your creditworthiness as a whole. This could include:
When you have bad credit the larger your deposit is the better. This is because lenders will see you as less of a risk the smaller the loan is that you need. Due to this bad credit lenders will have set minimum deposit requirements based on the type of adverse credit you have and how much time has passed since they were registered. The more severe your bad credit is the more of a deposit you may be asked to provide. For example, a lender may set a higher deposit requirement for someone who has a history of bankruptcy versus someone who has a few missed mobile phone payments.
The rates will be dependent on your personal circumstances and the size of the deposit. The larger your deposit is the more your loan to value (LTV) will decrease.
Below is a list of rates accurate as of November 2021 based on a mortgage for £150,000 over 30 years. The rates are for demonstrative purposes only.
As you can see the rates can change for each scenario. The mortgage you would qualify for will be subject to multiple criteria. So, it is best to let one of our superheroes advise you on the right one.
