Can I get a mortgage with bad credit?
One of the most common questions we get asked is ‘Can I get a mortgage with bad credit?’ We thought we’d break it down for you in this handy blog and video explanation!
What is ‘bad credit?’
First of all, what is bad credit? Most of us have been rejected for credit in the past, this is why you think you have bad credit. Not only do we have different lenders, but we also have different property ladders, and each of them has different criteria for lending money. There’s no right or wrong answer to what’s considered ‘bad credit’ – a lot of us have had credit issues in the past where we have missed a small credit card payment here and there, but what are the things that cause ‘bad credit’?
- Debt relief orders
- A severe amount of missed payments
There are specific lenders In the UK that are designed for these sorts of things and can recommend advice to help you recover your credit file and get you on the property ladder. It’s worth having a good route through your credit file before you make an application.
If you’re anxious that your bad credit will pull block you from getting a mortgage, stop worrying! It’s still possible to get a mortgage with bad credit, it’s just slightly harder. There are mortgages designed for people with poor credit, and particular lenders specialise in these areas. But remember, you should only sign for a mortgage if you can afford your monthly bills, if this isn’t possible then you will be at risk of losing your home.
So how do bad credit mortgages work?
These are just like regular mortgages, but it is likely to come with a higher interest rate and your borrowing limits will decrease. You could be asked for a larger deposit, this could be around 20-25% of the property value, in comparison to a person with a good credit score, obtaining a 5-10% – having a lower credit score can be viewed as high risk by your lender.
In conclusion, the higher your score, the better your chances are of your mortgage getting approved with lower interest rates.
If you seek further advice about first-time purchases or any other steps in house buying, then drop us an email firstname.lastname@example.org or give us a call on 01925573328.
Disclaimer: As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.