How to Get a Mortgage with Bad Credit

For most of us getting a standard mortgage is hard enough as it is but for those with a poor credit rating it’s even tougher. At times it may even feel impossible as having any kind of defaults, CCJS (County Court Judgments) or a record of bankruptcy puts you in a bad light with most lenders. The good news is there are some lenders out there who are willing to take on mortgage applications that may have been refused by others. First things first..

Can you get a mortgage with bad credit?

In short — yes you can but you are going to have to approach a specialist lender who deals with mortgages that cater towards people with bad credit.

Most standard lenders require you to perform a credit check before approving of any kind of mortgage. Banks and building societies are very cautious on who they lend too so they carefully check every applicants financial history before proceeding wit anything else. 3 key factors standard lenders look at before offering an applicant a mortgage are:

  • The applicants credit report.
  • Do they have any CCJ’s.
  • Have they ever declared bankruptcy.

If any of the above apply to you, your mortgage application is very unlikely to be accepted. In the rare case that it is, you will have to pay a much higher rate of interest even if your financial issues have passed and you put down a sizable deposit.

Which types of mortgages am I eligible for if I have bad credit?

As stated earlier, you will have to go through a more specialist lender who deals with applicants who have bad credit. These types of mortgages are generally known as ‘sub-prime’ or ‘adverse-credit’ mortgages.

With these mortgages 2 key differences are you will be expected to pay higher than normal interest rates and you will have to put down a larger initial deposit. To get your application approved you should be looking to put down around 20–30% loan to value ratio as opposed to the normal 15% loan to value ratio standard mortgage lenders would look at. In addition you should have a good steady income.

The main reason behind the increased rate and deposit is lenders try to mitigate the risk of lending to you by charging higher rates and asking for larger deposits.

Click here to view and compare the top 10 mortgage lenders who cater for people with bad credit.

How can I improve my credit rating

There are a number of ways you can improve your credit rating, some of which include:

  • Check that your credit score is correct and up to date.
  • Get on the electoral roll.
  • Close any old credit card accounts.
  • Build a good credit history. This means start showing that you can repay any debts and pay bills and on time so lenders can see that you are responsible and reliable.

For more information about credit reports click here

How can i improve my mortgage application?

Start to repair your credit history — this means show you are responsible and start paying bills and debts on time
Wait a while — If you have a patchy financial history give it some time before applying for a mortgage. Some issues are seen as less serious over time. While you wait be sure to try and improve your financial situation.
Be honest — Lenders carry out thorough financial checks, do not lie about anything as you are more than likely to be found out and risk your whole application being removed.

There will always be options for people with bad credit to get a mortgage, you just need to know where to look. Be sure to research every opportunity and then compare important figures such as rates & deposits.

This will lead you to finding the best lender for your needs.

We hope our article will go a long way in helping you get a mortgage if you had a bad credit rating!

This article was brought to you by Housebuyers4u

Property expert with over 40 years of experience in the property sector.

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