Bad Credit Mortgages

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Can I get a mortgage with bad credit?

Bad credit can come from a number of things and may range from a late or missed payment, to defaults, County Court Judgements and Debt Management Plans. Clients often come to us without even realising they have blips on their credit report which is why it’s of great importance to check your credit report as early as possible into the mortgage process.

The good news is, you can still get a mortgage with bad credit! Depending on the type of adverse credit and when the adverse was recorded, you may still be able to get a mortgage with a high street lender. However, when the bad credit is more recent or more severe, you may have to approach a specialist lender. You may need to put down a bigger deposit and the rates are likely to be less favourable.

The best way to check your credit history is to get a copy of your credit report here.

This report combines all of the three main credit referencing agencies which means we can approach the lender that uses the one showing your credit history in the best light.

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Can I get a mortgage with a CCJ?

A County Court Judgement doesn’t necessarily mean that you can’t get a mortgage but you will need to put down a higher deposit. For example, whilst someone with a good credit rating can usually get a mortgage with a 5% or 10% deposit, a client with a CCJ registered six months ago, are likely to need a 20% deposit.

What is a default and will that impact my mortgage chances?

Most creditors will put your account in ‘default’ if you miss six continuous payments and they will stay on your credit file for six years.
Some lenders will ignore defaults for utility companies, especially if less than a certain value and others can ignore if more than three years old. Generally speaking, you still have lots of potential mortgage options if you have a default.

Can I get a mortgage with an IVA?

An Individual Voluntary Agreement (IVA) is a form of insolvency and a legally binding debt solution which may allow you to make affordable payments on your debt. If you have an IVA, you may still qualify for a mortgage but are likely to need a larger deposit. Factors such as when the IVA was registered, if it is still active and if you have continuously kept up to date with the repayments may also affect your eligibility. An IVA will stay on your report for six years.

Can I get a mortgage with a DMP?

A Debt Management Plan (DMP) is an informal arrangement with creditors to pay down debt over a reasonable period of time, usually no more than 10 years. Getting a mortgage with a DMP is possible whether it is active or complete, but your options are more limited if it is still active.

Can I get a mortgage if I use Payday Loans?

Relying on Payday Loans can prove troublesome when applying for a mortgage as lender view them as you living beyond your means. For this reason, you need to have not taken out a payday loan in the six months prior to applying for a mortgage.

How can I Improve my Credit Score?

There are various ways to improve your credit score. These include:

• Registering on the Electoral Role

• Pay all bills by direct debit so that you never miss a payments

• Check your report regularly for any mistakes or errors- contact the relevant agencies to have them removed if required

• Break financial links with anyone who has poor credit as their credit rating can affect your own

• Regularly check for fraudulent activity

• Keep your credit utilisation low- don’t max out your credit cards

• Avoid using your overdraft

I have not bad credit history but my credit rating is low. How can I improve it?

If you are a First Time Buyer, you may not have much credit and therefore your credit score may be low. You can prove to lenders that you can be trusted with money by applying for a low value credit card. You only need to keep a small balance on it and set up a direct debit to at least make the minimum payment each month to increase your score.

Can Klarna help to boost my credit score?

Klarna will not help boost your credit score and lenders do not like borrowers who use it as they view it as you living beyond your means. Klarna should be avoided if you are looking to apply for a mortgage.

Please get in touch to discuss your options if you’re concerned about your credit history and your eligibility for a mortgage.

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