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Apply for a mortgage with bad credit

  • Poor credit may seem like a show stopper to getting a mortgage.
  • You can get a mortgage with bad credit history from most mortgage lenders.
  • Our experts in poor credit mortgages will help you secure the best mortgage based on your circumstances.
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Mortgage with bad credit history

Getting a mortgage with bad credit history

You may have had a rough patch in the past or late payments due to forgetting to pay the odd credit card bill. These may have resulted in bad marks on your credit file. The good news is, in most cases, there are lenders who can help you with a mortgage.

Prior to the crash that started in 2007, getting a mortgage with bad credit history was very easy regardless of income.

Sub-prime mortgages for buyers with adverse credit history were widely available. However, this changed after the crash and we are only seeing specialist bad credit mortgage lenders popping up in recent years.

This new “responsible lending” era also means that depending on your credit history, high street lenders may accept a certain level of bad credit mortgage, but for more serious cases, specialist lenders are more likely to offer the solution.

Can I get a mortgage with poor credit?

The short answer is: possibly YES! Everyone’s circumstances are different, so each case has to be considered on its own merit. However, lenders do accept the following credit issues subject to terms and conditions:

  • Late payments
  • Missed payments (even on a mortgage)
  • Defaults
  • CCJs (County Court Judgements)
  • IVAs (Individual Voluntary Agreements)
  • Arrangements
  • DMPs (Debt Management Plans/Schemes)
  • Repossessions
  • Bankruptcy

Although payday loans may mean that you avoid having a late or missed payment on a credit commitment, they are considered to be a form of bad credit and will restrict the lender choice.

Please remember that lending criteria are different for every lender, so your own bank not being able to help doesn’t mean that there is no solution for you.

How to get a mortgage with poor credit?

The first step is to review your credit files. Most lenders either rely on Experian or Equifax, while a few also use CallCredit.

In order to avoid surprises during the application process, you should download your reports and make sure that everything on them is correct.

If something is missing, duplicated or incorrect, it may take several weeks to put things right, so better to deal with the credit files as soon as possible.

Checking your own credit file won’t have an adverse impact, as lenders are only sensitive to credit searches that relate to obtaining credit. For example, applying for a store card or car finance as well as a mortgage. For this reason, avoid collecting agreement in principle certificates, as they don’t guarantee a mortgage, but can jeopardise your ability to get a mortgage in the near future.

To increase your chances of getting a mortgage with poor credit, let a broker go through the details and help improve your situation. We can advise you regarding the best mortgage deals for poor credit scenarios. Applying for a bad credit mortgage may mean higher rate deals from specialist lenders and you may need more deposit than someone without a poor credit history. However, it all depends on the details of the credit files.

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Credit score

Mortgage lenders don’t normally use the credit score given by Experian, Equifax or CallCredit. Instead, most lenders have their own scoring system based on your credit history details and other aspects. There are also some lenders, who don’t score at all. However, all banks and building societies check your credit history.

Getting a mortgage with a default

Missed or late payments once in a while may happen, but when you missed or not paid in full a commitment for 3-6 months, you may get a default notice. Tempting as it may be, please don’t ignore the notice letter, as at this stage you don’t have a default yet. Try to settle the debt or contact the provider to see if you can come to an arrangement about paying off your debt.

If you do end up with a default, then it’s good to know that lenders prefer defaults, which were registered a number of years ago for a small amount and satisfied (i.e. paid off) well before the bad credit mortgage application. The lender specific requirements, however, will range from no defaults ever to accepting multiple unsatisfied defaults.

It is important to realise that not all defaults are treated equally. Getting a mortgage with a default on a secured loan or a mortgage is more problematic than a default on a mail order or mobile phone contract.

Defaults on credit cards and loans are somewhere in between in the eyes of lenders. Consequently, if you struggle with your bills, prioritising an existing mortgage or secured loan payment may help you in the future.

Getting a mortgage with a CCJ

After receiving a default notice and possibly a series of reminders from a creditor, if you don’t respond, they may take legal action. This may result in a County Court Judgement (CCJ) being registered against you.

Once a court finds that you are liable to pay the subject debt, you can still avoid having a CCJ recorded against you by paying the debt in full (including any interest and court fees) at this point. If you don’t settle this debt, then it will be entered on the Register of Judgments, Orders and Fines, and it will also show on your credit record.

When assessing lender options, it will be important how long ago you had a CCJ registered and then satisfied and what amount it was for. Consequently, getting a mortgage with a CCJ will come down to the details of when things happened, so the most suitable bad credit mortgage lender can be chosen for you.

Getting a mortgage with a DMP

If you are going through a difficult time, you may make an agreement with your mobile contract, credit card or loan provider to pay a lesser amount for some time. It may just be an arrangement between you and the creditor or a more formal Debt Management Plan (DMP) via a DMP practitioner. Either way, these agreements are not legally binding and you can cancel them any time to return to your normal monthly payments or to settle the debt in full.

When applying for a mortgage with a DMP, you may have to explain to the lender why you experienced financial hardship that led to an arrangement or a DMP and how you can afford payments now.

But just like with defaults and CCJs, getting a mortgage with a DMP is possible. This is true, even if a DMP is not yet fully paid or settled.

The lenders available to you, in this case, are not necessarily those on the high street and you may have never heard of them. They are specialist lenders, often only available via brokers, so in order to maximise your chances of getting a mortgage with a DMP, our experienced brokers are here to help you.

Getting a mortgage with an IVA

Unlike a DMP, an Individual Voluntary Agreement (IVA) is a legally binding agreement and is registered on the Insolvency Register for the period it is set up for, so getting out of it may not be as easy or quick as from a DMP.

Just like with defaults, CCJs and DMPs, lenders don’t consider IVAs on mobile phone contracts or mail order accounts as bad as those on a credit card or personal loan. While an IVA on a secured loan or on a mortgage will likely mean that you have to wait longer before applying for a mortgage with an IVA.

It is important that you can get a mortgage with an IVA, but most lenders will require that the IVA was discharged over 3-6 years ago. Very few lenders offer a bad credit mortgage with an IVA within the last 3 years. It is possible though, so worth having a look at it.

Getting a mortgage after bankruptcy

When you find yourself in a situation that your unsecured borrowing is not manageable anymore and you cannot possibly keep up or pay back everything even if you sell up or work 24/7, bankruptcy may be a solution. Then once you are discharged from bankruptcy, typically a year after the bankruptcy order is made, you can start afresh.

However, during a mortgage application, lenders always ask about past bankruptcy, so you will always have to declare it, even if it doesn’t appear on your credit files anymore.

Some lenders can’t accept past bankruptcy at all, while others require you to be discharged for at least 6 years. Yet others can offer a bad credit mortgage with bankruptcy in more recent years, but not before you are discharged.

As you may expect it, the longer the time since you have been discharged, the more lenders can offer you a bad credit mortgage at lower rates and with smaller deposits. Letting time pass may also allow you to rebuild your credit history with for example credit repair credit cards and to save up for a deposit more comfortably.

Getting a mortgage after repossession

In the unfortunate event that you had a property repossessed, things may appear bleak initially, but time will heal the situation in this case as well. Even though many lenders will never be able to accept you for a mortgage after repossession, the more time elapses, the better position you are in to secure a bad credit mortgage.

When assessing your options, we would take into account not only when the repossession happened, but also your circumstances and credit history at the time, the amount involved and the lender it was with amongst other aspects.

All the above can have an impact on which lender will be available to you and suitable for you this time.

Finally, lenders will consider your credit history since the repossession and your current financial situation. It goes in your favour if you had a one-off life event that resulted in repossession, e.g. divorce or serious illness leading to financial difficulties. If since then you have been conducting your accounts satisfactorily, you can potentially get a mortgage after repossession more easily than someone who appears to mismanage their finances continuously.

Can I remortgage with bad credit history?

When your initial mortgage deal ends and you don’t want to revert to the lender’s standard variable rate (SVR), you can take a new deal from your current lender or from a different lender.

If your initial deal was chosen to accommodate your poor credit history, but since then you haven’t had any late or missed payments, then this time you could probably get a better deal from a different lender.

On the other hand, if your situation hasn’t really improved or you had a clean credit history up until recently, when a few blips happened, we should look at your options, as your current lender may or may not be able to offer you a new deal.

I have a partner with bad credit history

Sometimes people ask to be on the mortgage alone as their partner has a bad credit history. This can be done, although you should be aware of a few points:

  • Some lenders insist on married couples to be on the mortgage together.
  • If someone above the age of 17 will live in the property but is not on the mortgage, we have to give their name and age during the mortgage application process and they will have to sign an occupier waiver form.
  • Lenders normally ask why a partner is not on the mortgage. Age difference, personal preference, cultural reasons are normally acceptable explanations, but bad credit history is not. This is because a partner mismanaging finances may have an impact on your ability to pay the mortgage.
  • If you had an ex-partner with bad credit history and they still appear as a financial associate on your credit file, this may impact on your ability to borrow. If you are no longer together or no longer have a joint account or joint credit commitment, you should ask for dis-association on your credit files.

In a nutshell, you can potentially get a mortgage when your partner has a bad credit history, but you should seek specialist bad credit mortgage advice to avoid disappointment.

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Looking for a bad credit mortgage calculator?

Bad credit mortgage calculators are no different than good credit mortgage calculators. If a lender decides to offer you a mortgage with bad credit history, your borrowing potential with that lender will be the same as if you had a clean credit history. In other words, the amount you can borrow from a lender is not dependent on your credit history. Our selection of calculators can assist you, even if you are looking to obtain a mortgage with bad credit history.

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