How to get a mortgage with bad credit
- Improve your credit history
- Register to vote
- Look at past shared financial history
- Check your credit report
- Take your time
- Appeal to lenders
- Gifted money from family for a deposit
- Have a family member become a guarantor
- Speak to a mortgage or financial advisor
Improve your credit history by borrowing responsibly and making your repayments on time. This can be as simple as spending on a credit card and making sure you clear the balance on time, every month.
Register to vote at your current address as a simple way to improve your credit score.
Look at past shared financial history. It’s important to consider who you’ve shared financial payments with in the past. This could be an old housemate or a partner that you used to share an account with.
Check your credit report with a free credit service. Credit check companies like Experian and Clearscore can give you a general idea of how lenders see you. They can also give you tips on how to rebuild your score.
Take your time. Depending on the credit problem, some marks on your credit history may disappear over time. This means certain lenders might consider your mortgage application even after you’ve gone through bankruptcy, an individual voluntary arrangement (IVA) or a CCJ.
Appeal to lenders by applying when you’ve got yourself into the best financial position you can be in. A regular, stable income is always a big plus, as is a big deposit. If you do have some credit issues from the past, lenders like to be able to see you’ve made efforts to fix them.
Gifted money from family can be used for a deposit. Some lenders will accept a deposit if it’s ‘gifted’ from a member of your family. But the lender won’t accept a gifted deposit that’s a loan, so you must be under no obligation to pay the money back.
Having a family member become a guarantor could be a great option if you find yourself unable to get a mortgage. A guarantor is someone such as a parent who agrees to cover the mortgage repayments if you can't.
Speak to a mortgage or financial advisor if you have concerns about how your bad credit could affect your getting a mortgage.
The pros and cons of a bad credit mortgage
- If you’ve been rejected by the big high-street lenders, you could still find a deal through a specialist lender. They can help secure bad credit mortgages. Make sure to shop around to find the right deal for your financial situation.
- Getting on the property ladder is a big plus. If you’ve found the perfect property and the right mortgage deal, successfully making monthly repayments can help improve your credit history.
- In the right situation, like when the housing market has slowed down, you may have a better chance of negotiating a better price for a property you want.
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Getting a bad credit mortgage now means you have less time to build up your credit score. If you wait and work on improving your credit report, you may be able to shop around for better deals on a wider choice of mortgages.
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Less time to save for a deposit. The larger your deposit, the more likely you are to be accepted by a lender, as it shows you can handle your finances.
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A bad credit mortgage usually means higher interest rates, which means you’ll pay more back over time. If you wait and improve your credit score and financial situation, you may find a better deal with better rates.
What our expert says
Don't feel too defeated if you have a bad credit rating and are considering purchasing a property or remortgaging. There could still be plenty of options available to you depending on your circumstances.
If you have bad credit, comparing mortgages is a good way to find out what your options are.
Louise Thomas
Personal finance expert
Need any more help?
Can I get a joint mortgage with bad credit?
Yes, and it can sometimes help. If, for example, you have a poor credit record but your partner has a good record, you might be seen as lower risk than if you were to apply for a mortgage by yourself.
There are lenders who specialise in joint mortgages involving only one bad credit applicant. But you're still unlikely to get as good a deal as if you both had excellent credit histories.
Can I get a mortgage if I’ve been made bankrupt?
You won’t be able to apply for a mortgage until you have been discharged from your bankruptcy, which usually takes a year.
But even though you can then apply for a home loan, it’ll be hard to find a lender who’ll do business with you for a few more years.
Some lenders will wait until the bankruptcy has been removed from your credit file, which normally takes 6 years. But some lenders will consider you for a bad credit mortgage before that. They're just likely to want to see proof that you’ve successfully managed your credit in the years since the bankruptcy.
Can I get a mortgage if my house was repossessed?
Technically, yes you can, but it can be hard. Lenders may not want to accept someone who has fallen into serious arrears with repayments before.
But if you’ve rebuilt your credit score, a bad credit mortgage lender might consider you – although you’re unlikely to qualify for the most competitive deals as you’ll be considered high-risk. You'll probably only be offered rates considerably higher than the Bank of England base rate.
Can I remortgage with bad credit?
Yes, but you're unlikely to get the best deal with a new lender if you have a poor credit record. That's unless you want to stay with the same lender and don't want to increase your borrowing. Then, your credit history might not be a factor when it comes to remortgaging.
What’s the lowest credit score you can have for a bad credit mortgage?
There isn’t one. Credit reference agencies use different methods of scoring consumers, and lenders use different ways of analysing this information. Each lender will use a different scoring method.
Will interest rates be higher on a bad credit mortgage?
As a rule, yes. Lenders will consider you to be a higher risk, so they’ll price that into their products.
You’ll also have a smaller choice of providers who are prepared to take you on. This means the market is less competitive than it is for borrowers with perfect credit records.
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