How to Get a Mortgage With Bad Credit

Adverse credit can make getting a mortgage more challenging, but it’s certainly not impossible. It really depends on what type of credit issue has been recorded, when it happened, and the amounts involved. Choosing the right mortgage lender can also make all the difference. 

With the right approach and understanding, getting the mortgage you need for the property you want to buy is still achievable. Read on to find out how. 

What Is Adverse Credit?

Adverse credit, more commonly known as either ‘bad credit’ or ‘poor credit’, is a term used when describing someone’s credit history where one or more financial discrepancies have been recorded, typically over the last six years. As a result, this has had a negative impact on their credit score. 

How Does Adverse Credit Lower Your Credit Score?

Different types of adverse credit affect your score in different ways. Minor issues include things like late payments, payday loans, or going into an unauthorised overdraft. Defaults, mortgage arrears, and County Court Judgments (CCJs) would be considered more severe. The most serious would be Individual Voluntary Arrangements (IVAs), Debt Relief Orders (DROs), repossessions, and bankruptcies​.

The impact on your credit score also depends on when the issue occurred and how it’s been handled since. A single late payment from two years ago won’t weigh as heavily as a recent default or ongoing debt management plan. 

Mortgage lenders will consider the type, amount, and timing of the credit issues when assessing your application. So, even with severe marks, a mortgage could still be possible if enough time has passed.

How Does a Bad Credit Mortgage Work?

Bad credit mortgages work in much the same way as standard ones—you borrow money to buy a home and pay it back in monthly instalments. The key difference is that lenders offer these mortgages to people with a history of adverse credit. 

As there’s more risk involved for a lender, interest rates are usually higher for bad credit mortgages, and you may need a bigger deposit (between 5% and 15% for applicants with a minor credit issue and from 15% to 30% for more severe or serious credit issues). 

Despite the stricter terms, bad credit mortgages open the door to homeownership when mainstream banks say no. They also provide an opportunity to repair and rebuild your credit record, as consistent monthly repayments will have a positive impact on your credit score over time. 

Where Can You Get a Bad Credit Mortgage?

In reality, pretty much every mortgage lender will have some leeway to accept an application that might not come complete with a perfect credit score. But, it’s usually much harder to be accepted by larger, mainstream banks, particularly if the credit issue recorded on your report is fairly recent and more severe, rather than minor. 

If you already know adverse credit is still recorded on your credit history, rather than take the chance of being rejected by a high street mortgage lender - which could cause more stress on your credit score, as a hard credit search would also be recorded along with the resulting rejection - the wiser move is to look for a specialist mortgage lender with experience of helping people in similar situations. 

That’s where we can help! 

How Can You Get a Mortgage with Bad Credit?

It’s a myth that you can’t apply for a mortgage with a bad credit score. The route to getting the mortgage approval you’re seeking won’t necessarily be straightforward, and there may be some bumps in the road along the way, but by following these steps, you’re chances of success will be far greater.  

• Check your Credit Report: You can get a copy of your report from each of the main Credit Reference Agencies (CRAs): Experian, Equifax, or TransUnion. Alternatively, Checkmyfile* provides a combined report and score based on information from all three. 

• Repair your credit score: Check your Credit Reports for any inaccuracies or outdated information and take time to rebuild your score. 

• Reduce outstanding debts: Paying down existing debts can improve your debt-to-income ratio, making you more attractive to lenders.

• Avoid new credit applications: Multiple credit applications can negatively impact your credit score and should be avoided before applying for your mortgage. 

• Register on the electoral roll: Being registered can boost your credit score and verify your address to lenders.

• Save for a larger deposit: A higher deposit will make you a more attractive applicant to a wider pool of mortgage lenders and will offset any risk or concerns they may have. 

• Seek specialist advice: Mortgage brokers experienced with adverse credit cases (like us!) can guide you to the right specialist mortgage lenders who will look more favourably on your application. 

*When you click through to our affiliate links, we may earn a small commission. We only recommend sites we trust and believe in. 

What About Joint Mortgages?

Yes, getting a joint mortgage is also possible. The same applies for joint applications as it does for sole applicants, where a mortgage lender will want to know the type of credit issue that has been recorded, when it happened, and the amounts involved. 

This applies whether just one applicant has adverse credit or both. If just one of you has adverse credit and the other applicant has a perfect credit score, this will certainly help your chances of success, depending on how severe the adverse credit issue is. 

Regardless of your credit score, a lender will still want to look at the whole picture - your combined income and outgoings, deposit size, amount you want to borrow, employment status, etc. - for all applicants, before making their decision.