Getting a bad credit mortgage with adverse credit can be tough, especially if you have defaults, county court judgments (CCJs), individual voluntary arrangements (IVAs) or a bankruptcy in your credit history – but it’s not impossible.
Can I get a mortgage with bad credit?
It’s often possible to get a mortgage with a less-than-perfect credit history, although your options may be limited.
Lenders conduct a credit check on anyone applying 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 much time has passed.
If you have a bad credit history, some high-street banks may refuse to give you a mortgage outright. Building societies can sometimes be more flexible and there are also specialist bad-credit mortgage lenders, some of which cater specifically for people who’ve faced illness, divorce or other difficult life events.
Specialist lenders tend to be more flexible when assessing your mortgage application, but they often charge higher-than-average interest rates and require larger deposits in return.
How to get a mortgage with bad credit
If you have a poor credit history, there are a number of steps you can take to improve your chances of getting a mortgage.
- Give it time: blemishes on your record could be seen as less serious over time, especially if your financial situation has improved.
- Consider your partner’s credit history: buying with a partner will mean their credit history gets taken into account as well as yours.
- Repair your credit history: establish a pattern of consistent payments and responsible credit usage.
- Present as a lower risk: apply when you have a stable income and try to offer a high deposit, which may mean looking at cheaper properties.
- Be honest: mortgage lenders will conduct thorough searches, and trying to hide adverse credit will look bad.
- Have an explanation: lenders will be interested in why you got into financial trouble and what you’ve done to remedy the issue since then.
Understanding rates on bad credit mortgages
It can be difficult to compare bad credit mortgage rates, as different deals will be available to you depending on your personal credit history.
Deals that allow for CCJs and IVAs, for example, will have specific rules around how long ago an IVA has to have been satisfied, and how many CCJs you can have had in recent years or months.
Ultimately, an applicant with a blip on their credit report which has now been resolved is likely to be able to obtain a much better rate than somebody with serious outstanding issues. So while some ‘bad credit mortgages’ will be fairly accessible to customers with poor credit history, some can be much harder to secure.
As well as having higher initial rates, deals available to people with credit problems may come with higher up-front fees. With this in mind, it’s important to analyse the full cost of the mortgage before choosing a deal and take advice from a mortgage broker.
