Bad credit mortgages

Everyone deserves the chance to buy a property, even if your credit history isn’t perfect. At Everest Mortgages, we’re here to help people to secure bad credit mortgages, because we don’t think a less than ideal financial history should hold you back from homeownership.

Whether you’ve missed a few credit card payments, had a County Court Judgement (CCJ) or faced bankruptcy in the past, our expert mortgage brokers can help you to find lenders who understand.

Can you get a mortgage with bad credit?

Getting an adverse credit mortgage might be more complicated, but it’s by no means impossible, and it’s definitely not something to be embarrassed about. Though you might not have the widest selection of fixed rate mortgages or variable rate mortgages to choose from – and a 100% mortgage might be off the table for now – that doesn’t mean getting a mortgage is completely out of the question.

We’ve helped countless buyers to secure competitive mortgages despite previous financial difficulties, and we’re ready to help you too.

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The impact of bad credit on mortgages

When people talk about bad credit, they’re referring to a history of financial difficulties or missed payments that have negatively impacted your credit report. Lenders use this information – provided by credit reference agencies like Experian, Equifax and TransUnion – to assess how likely you are to repay a mortgage. Though a low credit score doesn’t automatically mean you’re not able to get a mortgage, it does mean lenders are likely to look a little more closely at your financial circumstances before they make their final decision.

There’s a whole host of things that can cause bad credit such as missed or late payments on credit cards, loans or bills, defaults on accounts, CCJs, IVAs and bankruptcy. Multiple recent credit applications can also have an impact, as can payday loans. Each of these affects your credit rating differently, some have a greater impact than others, and lenders look at them all to get an overview of where your score currently stands.

Having a poor credit score doesn’t disqualify you from getting a mortgage, but you may be limited on the mortgages available. For example, you might not be eligible for a no deposit mortgage, but a high fixed rate mortgage could be well within reach.

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How bad credit affects your mortgage application

It doesn’t matter if you’re a first time buyer or you’ve diving into property ownership for a second, third or fourth time, bad credit will affect your mortgage application.

But, that’s not the end of the world.

Mortgage lenders will look at more than just your credit score; they assess your income, affordability, deposit size and how long ago the credit issues occurred. This could mean that though your credit score could do with some improvement, you’re still able to secure a mortgage.

Date of Credit Issues – Older credit problems, such as those that occurred over 2 to 3 years ago, tend to carry less weight.
Severity – A handful of missed payments are treated differently than more severe issues, like bankruptcies or repossessions.
Deposit – A larger deposit can offset risk and improve your chances of being approved for a mortgage.
Income Stability – Consistent earnings or a steady business history can reassure lenders that you’re able to keep up with mortgage repayments, making approval more likely.

The more evidence you have to show that your finances are back on track and your credit score is on the up, the better your chances are of being approved.

What credit score do you need for a mortgage?

There isn’t a fixed minimum score that guarantees you’ll be approved for a mortgage, as each lender has its own criteria. If you have a high credit score, you’ll be eligible for most high street lenders and you’ll be able to access the best rates. If your credit score is low, you might need to have a higher deposit and commit to a higher interest rate to show lenders that you’re a risk worth taking.

Lenders look at your income, expenditure, employment status, affordability and property valuation before making a decision. Trust us, we’ve helped many borrowers with scores below average to secure mortgages, and we can do the same for you.

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Good credit vs. bad credit mortgages

There’s nothing stopping you from getting a mortgage with adverse credit, but it’s slightly different to if you were applying with a brag-worthy credit score.

Having bad credit tends to mean that you have fewer options when it comes to lenders, deals and interest rates.

Lenders tend to offer higher interest rates to applicants with bad credit.

You’re likely going to need a larger deposit – or more equity in your property, if you’re remortgaging – to get a mortgage with bad credit.

When it comes to adverse credit mortgages, deposit size matters

There’s been a lot of talk lately about no deposit mortgages and 100% mortgages, many of which are helping first time buyers get on the property ladder. Unfortunately, having bad credit can put many of these somewhat out of reach. With defaults and missed payments bringing your credit score down, lenders want the security of you having a larger deposit, as this reduces their financial risk.

Luckily, the Everest Mortgage experts are to help you find a mortgage that works for you, regardless of what your credit report says.

Bad credit mortgage broker

Bad credit doesn’t have to put a stop to your dream of being a homeowner. With the right guidance, preparation and help from Everest Mortgages, you can find a mortgage that works for you and your financial history. We know all there is to know about helping buyers to find the right mortgage, even if you are dealing with a poor credit score.

FAQs

Frequently asked questions

How far back do mortgage lenders look?

When it comes to your credit history, lenders look back over the last 6 years, as this is as far back as credit reference agencies go. Any missed payments, defaults and CCJs before then won’t be seen.

What’s the lowest credit score mortgage lenders accept?

There isn’t a one-size-fits-all answer to this question, as all lenders are different; TransUnion, Experian and Equifax score credit history in their own way. But, as a base line, people with credit scores under 400 will find it more difficult to get a mortgage and are usually subject to higher interest rates.

Can first time buyers get a bad credit mortgage?

Yes, if you have bad credit and you’re a first time buyer, you can still get a mortgage. However, your choice of lenders may be more limited. Some lenders offer 100% mortgages and 95% mortgages for first time buyers, but if you have bad credit, you’ll usually need a 10% to 15% deposit.