Bad Credit Mortgage

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Author: Elliott Culley - Director & Mortgage Adviser of Switch Mortgage Finance

What is a bad credit mortgage?

A bad credit mortgage is a term used to describe a mortgage arranged with a specialist lender for a borrower who has experienced financial difficulties in the past.

Can I get a mortgage with bad credit?

Yes, it is certainly possible to obtain a mortgage if you have bad credit or had bad credit in the past. There are many reasons why you may have had bad credit, but this shouldn’t stop you from getting a mortgage.

There are many specialist lenders we have access to that want to help clients who have had a history of bad credit. Of course it does depend on the type of adverse credit you have experienced and in some cases how long ago this happened.

If you think you might have bad credit or a low credit score, I would always recommend speaking to a mortgage adviser like ourselves, as we have access to all the specialist mortgage lenders who deal with bad credit.

This means we can tell you straight away what your position is, and make a plan if necessary, which is much better than not knowing what your chances are at all. 

Types of bad credit

Bad credit would include, late/missed payments, defaults, arrears, county court judgements (CCJs), individual voluntary arrangements (IVAs), been placed on debt management plans or suffered bankruptcy in the last six years.

Can I get a mortgage with late/missed payments?

Yes you can obtain a mortgage with late or missed payments. You may even qualify with a high street lender. It will depend on your credit score and how long ago this occurred. High street lenders criteria is much more strict, and you will have a much better chance of success with a specialist mortgage lender.

You will need to be up to date on your current payments if you want to be considered by any mortgage lender.

Can I get a mortgage with a default?

When assessing a default, it will really depend on how long ago these defaults took place, how many you have, and when these debts were settled.

Satisfied defaults are considered better than unsatisfied ones, because they are proof you have settled past problems. Minor defaults, such as missed phone contract payments, will be taken less seriously than defaults made on mortgage payments or secured loan payments.

Naturally if the default occurred further into the past, it will have less affect and you will have more lenders available.

Can I get a mortgage with a CCJ?

Yes, it is possible to get a mortgage with a CCJ. CCJ’s registered in the last twelve months will have much more of a negative impact on your chances of securing a mortgage offer. Particularly large CCJ’s (over £500), multiple CCJs, and satisfied CCJs will restrict your options further.

Can I get a mortgage with a debt management plan?

Yes, you can get a mortgage with an existing debt management plan. If your debt management plan has been in place for some time (12 months or more), and you have been successfully meeting all your payment obligations since it began, many lenders will consider you.

If you have only recently taken it out then you will have more limited options. Some lenders may request you clear the DMP as part of the mortgage. 

Speak to an Expert!

elliott-culley-mortgage-adviser- director-of-switch-mortgage

Contact us today for expert advice and guidance on your unique mortgage and property needs. We will work with you on a one-on-one to basis to help you find the right solution for your needs.  

With our experience you can rest assured that you are in good hands when it comes to securing the financing you need for your property.

How much deposit will I need for a mortgage if I have bad credit?

The deposit you need will depend on the severity of the bad credit you have as well as how long ago it was. If you have had some ‘light’ adverse such as defaults, missed payments and even small CCJs which occurred a few years ago, it is certainly possible to obtain a mortgage with a 10-15% deposit.

If you have had more ‘heavy adverse’ in the past, such as entering into an IVA, then you are more likely to need a higher deposit of around 25-30%.

Does it matter if my credit score is really low?

No, it does not matter as there are lenders that credit search rather than credit score. You will not be able to obtain a mortgage from a high street lender, but specialist lenders are less interested in your score and more concerned with what is on your credit report to see what adverse credit you have had and how long ago it was. Provided you fit their criteria they will not worry about your credit score.

Bad credit mortgage lenders

There are many mortgage lenders that specialize in bad credit mortgages. Some of the best you will find are intermediary only lenders which means you need to use a mortgage broker to submit your application.

Some bad credit mortgage lenders include:

Aldermore, Bluestone, Foundation Homeloans, Kensington, Kent Reliance, Vida Homeloans and West One.

All these lenders have their own criteria and rates and some offer more leniency than others. There are many other lenders as well that we have access to that may be able to help you. 

bad credit mortgage. adverse credit mortgage.

Can you remortgage with bad credit?

Yes you can remortgage even if you have bad credit. It may be beneficial for you to carry out a new product with your existing lender. However if you were to do this you will not be able to extend the term or raise more money if you needed to. Depending on your current mortgage provider it may not be the most cost effective either. Otherwise it is certainly possible to switch to another mortgage deal at the end of your current term if you have a history of adverse credit.

Can I improve my credit rating?

Yes, it is possible to improve your credit rating. The below are some things you should consider to improve your credit rating. Consider doing these things now:
  • Register on the electoral roll
  • Close any accounts you don’t use – e.g. store or credit cards.
  • Try to repay any credit card in full every month
  • Try to not max out your credit limit each month
  • Obtain a credit report – I recommend check my file which we have linked below as it includes the three main providers mortgage lenders use (Equifax, Experian and Transunion)

It is free for the first month before a monthly subscription of £14.99 is taken, however you can cancel at any time.

Once received, ensure your credit report is accurate and investigate anything you think is not correct.

Budget and stay on top of current debt and don’t obtain new debt, before or during a mortgage application

Should I wait to buy a house until my credit rating has improved?

Waiting could improve your credit score, which could mean a mortgage with a better rate.

However there is no guarantee on how long this could take. If you find a house you like and you can afford the repayments then you should certainly consider it. Properties currently are long term investments and getting onto the property ladder is one of the hardest challenges there is.

First time buyer mortgage with bad credit

Yes, there are many mortgage lenders who are happy to offer mortgages to first time buyers with bad credit. You just need to make sure you apply to the mortgage lender that suits your personal circumstances.

Can I get a buy to let mortgage with bad credit?

Yes it is certainly possible to obtain a buy to let mortgage. even if you have bad credit. The same criteria is applied as to what has been detailed above.

If this is your first time being a landlord or you are first time buyer, then there are some lenders that will not consider you, and you will want to make sure you apply to the correct lender by using a mortgage broker.

Why Choose Switch to Help You?

Whether purchasing or remortgaging, you’ll want access to the best products on the market. We have a proven track record of helping clients with fixed term contracts and will be able to advise you on the best steps to take. 

Why Switch Mortgage Finance