Can I Get A Mortgage With A Bad Credit Rating?

MORTGAGES | 03.04.2017

A poor credit rating can be a major barrier when buying a home. With most lenders assessing a potential borrower’s credit score before agreeing to a mortgage, your financial past could come back to haunt you.

Here’s our guide to increasing your chances of getting a mortgage if you have bad credit.

Can I get a mortgage if I have bad credit?

Bad credit is one of the most common obstacles that first time buyers face when looking to buy their own home. Banks and building societies tend to be cautious about who they lend to, checking applicant's’ financial history to see how responsible they are with credit. If a lender sees that you’ve defaulted on debt payments in the past, they may refuse your application. Other credit problems that could work against you include County Court Judgements and evidence of bankruptcy. Thankfully, there are mortgage deals out there designed for people with bad credit. There’s no guarantee that you will be accepted but it’s worth finding a lender who assesses each application individually. By finding a flexible and sympathetic lender you can certainly increase your chances.

What is a bad credit mortgage?

‘Bad credit mortgages’ are often known as ‘sub-prime’ mortgages or ‘adverse credit’ mortgages and they’re designed to help applicants with a complicated credit history to get their feet on the ladder. Although they operate in the same way as traditional mortgages, you may face higher interest rates. In some cases, you may be expected to put down a larger deposit too.

What information do I need to provide to lenders?

When applying for a mortgage, your lender will probably ask you for proof of income. If you’re employed, you’ll need to provide them with payslips and bank statements. If you’re self-employed, you’ll be asked for account evidence for a set period of time. Your lender will conduct an affordability assessment and may require you to fill in a budget sheet outlining your average monthly expenses. They’ll also ask you about any outstanding debts you have such as car loans or credit card debts. If possible, try to pay off such debts before applying for your mortgage.

How can a mortgage broker help?

A mortgage broker can really help to increase your chances of obtaining a mortgage. They’ll use their knowledge of the mortgage market to point you in the direction of the lenders most likely to give you the loan you need. After all, the last thing you want is to submit several applications only to be refused by lenders with strict and inflexible criteria. Not only will a broker save you time by keeping your applications to a minimum, they’ll also save you money by giving you access to deals best suited to your finances. If you’re a first time buyer, the home buying process can be a little confusing at times. Thankfully, a broker will assist you on your journey from the initial application stage right on through to completion.

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