The good news is that the market is vast and there are deals out there for all kinds of borrowers, from those with clean credit to customers whose record is less than perfect.
It doesn’t matter if a lender has turned you away in the past, with the right advice, it may be possible for you to obtain an adverse credit mortgage loan.
Our guide to mortgages for bad credit borrowers will help you get started, but you can make an enquiry to speak with an expert on this topic over the phone today, if you’d prefer.
What is a bad credit mortgage loan?
A bad credit mortgage is simply a mortgage for borrowers with a poor credit score, a low credit rating, or any other kind of adverse credit history.
Not all UK lenders offer bad credit mortgage loans, as credit issues are a bigger deal to some mortgage providers than others.
Can I get mortgage with a bad credit history?
Although some mortgage lenders will turn you away if you have an adverse on your file, some providers will base their lending decision on the severity of the credit problems, how long they’ve been on your file, and how closely you meet their other eligibility and affordability requirements.
What credit issues will a mortgage lender accept?
Some mortgage lenders (mainstream ones, in particular) might offer you unfavourable rates if you have any type of adverse on your file, while others may turn you away altogether. Specialist providers, however, often take a more flexible approach to mortgage customers with a bad credit score or a history of credit problems, and can offer a lifeline to those with any of the following…
- No credit history
- Low credit score
- Late payments
- Missed mortgage payments
- Debt management Schemes
What if I’ve had multiple credit problems?
If you approach a lender who specialises in adverse credit, it may be possible to get a mortgage with bad credit history as these providers often base their lending decision on the severity of the adverse, how long it has been on your file, and how closely you meet their other eligibility and affordability requirements.
Which credit issues do lenders class as the most severe?
While getting a mortgage with poor credit is possible, you may find it more difficult if your credit issue is a repossession or a bankruptcy, as these are considered to be the most severe types of adverse in the eyes of most lenders. At the other end of the scale, things like a missed phone bill payment are the easiest for lenders to overlook.
A bad credit lender will also take factors such as how long the adverse has been on the borrower’s file (the longer, the better) and the amount of deposit they have.
If you have any type of bad credit and need a mortgage loan, get in touch and the expert brokers we work with who will search the market for the lender best positioned to offer you a favourable deal based on your needs and circumstances.
How do I get the best possible rate with a bad credit mortgage?
By making sure you’re speaking to a mortgage adviser that can give you advice that’s not severely restricted, you’re going to be able to be considered by every single lender out there – at least, the ones for whom you meet the eligibility criteria.
The key to finding the most favourable mortgage rates for a borrower with bad credit history is having access to the market and meeting the eligibility and affordability requirements for as many lenders as possible.
What else impacts mortgage eligibility, besides my credit rating?
Although a mortgage provider will look at your credit history when assessing your application, they might also base their lending decision on the following factors…
- Your income and employment status: obviously, the more income you have, the better but how you make your money will also be of interest to the lender. A specialist provider might be needed if you’re self-employed or make a significant amount through bonuses, overtime or commission.
- Your deposit: the minimum deposit sum you’ll need for a residential property is 5% (although some providers will want more) or 15% for a buy to let. Putting down more, however, can minimise some of the perceived risk your bad credit creates.
- Your age: some lenders won’t cater for borrowers over 75, others up to 85 and a minority will lend with no upper age limit, as long as they’re confident the borrower will be able to keep up with their payments in retirement.
- Your outgoings: other significant outgoings, such as outstanding loans or dependent children, may affect the amount you’re able to borrow.
- The property type: properties with non-standard construction (e.g. thatched roof, timber frame) might require a specialist lender.
I have bad credit but my income is high – can I get a mortgage?
Income specifics can be vital to a mortgage application because most providers cap the size of a residential home loan at x4.5 the borrower’s salary, others will go up to x5 and a minority will stretch to x6 under the right circumstances.
If you’re a high earner after the maximum mortgage loan possible, you will need to find a lender that would be willing to offer the highest multiple of your wage. With bad credit, this can be tricky as some providers will see you as high risk.
However, with access to the entire market via our expert advisers, it may be possible to find a niche lender who is flexible with bad credit and an expert in your income type.
I have a bad credit history and am on a low income – can I get a mortgage?
This can be trickier as low income and bad credit are considered niches in the world of mortgages, but with market access, it may be possible to find a lender that specialises in borrowers who fall into both categories.
There are a number of options available for borrowers with low income, including guarantor mortgages, supplementing income with things like benefits (some lenders allow this) and government schemes such as Shared Ownership.
Get in touch and the advisors we work with who will discuss all of the options with you. They can also connect you with the lender best positioned to help a customer with low income and adverse credit on their file.
How can I improve my credit rating ahead of a mortgage application?
If you’re looking for a low credit score mortgage or any other kind of bad credit history mortgage in the UK, it’s always a good idea to get your credit file into the best possible shape before applying, and these tips will help you do that.
- Check your credit reports – all of them
- Get your credit rating – from all credit check companies
- Be an active borrower
- Make repayments on time
- Pay off more than the minimum payments
- Don’t use high percentages of credit in relation to your income or a card’s limit
How much deposit do I need for mortgage with bad credit?
Customers often ask us whether it’s possible to get a mortgage with a large deposit but bad credit, and for some of them, the answer is yes. As in all things, it depends on your personal criteria and background and how well that matches with the lenders expected criteria.
The minimum deposit requirement for a residential property in the UK is 5%, but if you have adverse credit, some lenders will only offer you a mortgage if you put down more, depending on the age and severity of the issue.
For example, those with a repossession against their name may be able to get a mortgage from specialist lenders within 1-3 years if they put down a 25% deposit.
Those with an individual voluntary arrangement (IVA) will need between 10-25% deposit, depending on how long is left to run on the debt, and those with a bankruptcy will need between 15-25% in the first three years.
Can I get a bad credit mortgage with just a 5% deposit?
It may be possible to get a mortgage with minor bad credit on your file, as long as you meet the provider’s other eligibility requirements – specialist advice will be essential.
Can I get a bad credit mortgage with just a 10% deposit?
It may be possible to find a 90% mortgage with bad credit, assuming you meet all of the lender’s general eligibility and affordability requirements.
You might, however, struggle if you have severe adverse on your file, such as a recent bankruptcy, repossession or IVA as the specialist lenders who offer mortgages to borrowers with these issues on their file usually need around 25% deposit if the credit problem is less than three years old.
Can I get a bad credit mortgage if I have a 50% deposit?
It is far more likely that you will find a mortgage provider who is willing to offer you a 50% LTV mortgage with bad credit as a deposit this substantial will offset the risk involved in the deal. You will still need to pass all of the lender’s standard eligibility and affordability checks, but a deposit of this size will certainly help your cause.
Can I get a 100% mortgage with bad credit?
This will prove difficult as lenders generally don’t offer 100 percent mortgages to customers with bad credit, or anyone else, for that matter.
One of the only ways to get a residential mortgage with no deposit whatsoever is by having a family member or close friend act as a guarantor. With a bad credit guarantor mortgage (also known as a bad credit family springboard mortgage), the lender will secure the loan against a property your guarantor owns or against their savings, and this security can serve as an alternative to a deposit.
Getting a guarantor mortgage with bad credit is the same as applying for any other kind of mortgage under these circumstances. If a lender considers you too high risk due to your adverse, having a guarantor is unlikely to change their mind on that.
What are bad credit mortgage lenders?
Simply put, they’re mortgage providers who specialise in customers with adverse against their name. While some mainstream lenders might turn these borrowers away, specialist lenders base their decision on the severity of the issue, the age of it, and how closely the borrowers meets their other eligibility requirements.
There are numerous different kinds of bad credit mortgage lender, including…
- Mortgage lenders for first time home buyers with bad credit
- 2nd mortgage lenders for bad credit customers
- Low/no credit score mortgage lenders
- And lenders who specialise in every other type of adverse credit
Can I get a mortgage with no credit check?
Not exactly. While it’s impossible to get a mortgage loan with no credit check in the UK, lenders aren’t generally interested in your credit ‘score’ – they’re interested in how your specific history fits in with their lending criteria.
In the UK, there is no set minimum credit score to qualify for a mortgage, but if yours is particularly low, it may be possible to find a lender that ‘checks’ rather than ‘scores’. Make an enquiry to speak with a market expert about this.
Can I remortgage with a bad credit rating?
If you have bad credit but need a remortgage you might well be in luck, as remortgaging with bad credit is often much easier than buying a home with adverse.
Borrowers in this scenario usually have two options – a full refinancing of their debt or taking out a second charge mortgage for borrowers with bad credit.
Can I get a bad credit home mortgage loan anywhere in the UK?
Almost anywhere. Bad credit mortgage lenders operate all over the UK, but some have postcode restrictions outside of England. Certain bad credit mortgage lenders in Scotland, for example, won’t lend in the Highlands or off the mainland, and you’ll find it’s a similar situation with bad credit mortgage providers in Northern Ireland.
However, the advisors we work with have access to every adverse credit mortgage lenders in Scotland and poor credit mortgage provider in Northern Ireland – if there’s a deal you’re eligible for, they could find it for you.
What are my chances of getting a mortgage with bad credit history?
Firstly, they will be higher if you approach of an experienced advisor who has access to many adverse credit lenders on the market.
Secondly, your chances of getting a mortgage with bad credit will likely come down to the severity of the credit issue(s), how long they’ve been on your file, and how closely you meet the lender’s other eligibility and affordability requirements.
Can I get a mortgage with really bad credit?
Many customers have asked us whether there are mortgage loans for people with really bad credit, and the answer to this question will vary from lender to lender.
The most severe forms of adverse credit are bankruptcies and repossessions, and there are a minority of specialist lenders who may consider offering mortgages to borrowers with these on their files. Their lending decision will mostly come down to how long ago the issue was discharged.
Do I need to pass a credit check to get a mortgage agreement in principle approved?
No lender in the UK can offer guaranteed mortgage approval if you have bad credit – all of them will perform some kind of credit check before offering you a decision in principle, and whether this will leave a mark on your file depends on the provider.
Some only perform a ‘soft’ search at this stage, while others perform a ‘hard’ credit check. You should avoid having too many hard searches on your file, where possible. Advisors will recommend a lender, taking into consideration credit checks at early stages.
How easy is it to get a mortgage with bad credit?
It can be more difficult than for borrowers with a clean credit rating, as fewer lenders are willing to take a risk on adverse credit customers. However, that doesn’t mean finding a favourable deal is impossible.
Whether you have a hard time finding a bad credit mortgage may come down to the severity of your credit problems, how long they’ve been on your file and how closely you meet the other items on the specialist lender’s eligibility checklist.
Can I get a mortgage with no credit history?
Most mainstream lenders will decline a customer who has a low credit score or no credit history, but a specialist provider may consider offering you a deal if you meet their other eligibility and affordability requirements very closely.
Moreover, there are steps you can take to build up some borrowing history. See the section titled ‘How to improve your credit rating for a mortgage’ for more info.
Are there mortgages for first time buyers with bad credit history?
Yes, mortgage loans are available for first-time buyers with poor credit history, but seeking specialist advice is highly recommended because some lenders consider first-time buyer mortgages to be higher risk and your adverse won’t help with that.
Not all mortgage providers will allow you to use one of the government’s buyer schemes, such as Help to Buy, to get a mortgage with bad credit, but a flexible, specialist lender might permit it, as long as you meet their other requirements.
Another thing to consider is that bad credit mortgages come with higher deposit requirements that some first-time buyers might struggle to meet, but if you make an enquiry, the advisors we work with will help you find the lender best positioned to help a first-time buyer with your needs, circumstances and credit rating.
How far back do mortgage lenders look at credit history?
Most lenders will typically look at the last six years, as six years is the maximum amount of time most credit issues can remain on your file. Even if you have active adverse within this timeframe, it may still be possible to get a mortgage, depending on the severity of the issue and when it was registered and sometimes, discharged.
Are there small mortgage loans for customers with bad credit?
Yes, the size of the mortgage you will get is all about affordability, offset against factors such as your credit rating. What’s ‘small’ to a borrower with high income might be substantial to somebody with low earnings, but the amount a mortgage provider is willing to offer you will be capped based on multiples of your salary.
Can I get a mortgage if I have a bad credit history?
Yes, it’s possible to get a mortgage with a bad credit history, although you may find your options are more limited than if you had a better credit score.
Most lenders will require a credit check before granting an application for a mortgage. However, some black marks on your credit history will carry more weight than others, depending on the amounts of money involved and how long ago it happened.
If you have a spotted credit history, some high street banks may refuse to lend to you. As an alternative, you can apply with a specialist lender, some of which cater specially to clients who have faced illness, divorce or other difficult life events.
These lenders are more likely to accept people with a poor credit rating and tend to offer more flexibility on affordability assessments.
But they do tend to charge higher-than-average interest and require larger deposits. In many cases (though not all), they may require a loan-to-value ratio of 80% or lower, meaning you would have to provide at least a 20% deposit.
Can I remortgage with bad credit?
Before considering remortgaging, look at ways you can improve your credit score.
Making your monthly mortgage repayments on time will help you build a stronger credit history (assuming all other debt is also paid back on time). If your credit rating has gone up after a period of time with a specialist lender, it may be possible to re-mortgage with a high street lender.
Whether you’re able to secure a better rate will depend on your credit score, your income, your property’s current value and the equity you hold in your home. The prospective lender will also run affordability calculations to ensure you’ll be able to afford payments at the new rate into the future.
A range of remortgaging deals are available on the high street, so it’s worth shopping around. You generally have to pay fees to remortgage, which you should factor into your decision-making.