Can I get a mortgage for bad credit? First Time Buyer Edition

In short, the answer is yes. It is possible to get a mortgage with bad or adverse credit. However, finding a mortgage with bad credit can be a lot more difficult as opposed to doing so with a good credit score.

When it comes to applying for a mortgage, every situation is different. Your deposit amount, income and credit score are all variables that will be considered by a mortgage lender when applying.

For those with a bad or low credit score, it may limit the mortgage deals available to you. However, getting onto the property ladder is still a possibility.

At Eden Hawk, we are proud to be a leading mortgage broker in South Wales. Our dedicated team of mortgage brokers and financial advisors have supported those in the local community over many years, finding the most suitable mortgage solutions to suit each individual’s requirements.

If you are currently considering applying for a mortgage with bad credit, contact us to speak to one of our specialist brokers. We will be able to assist and guide you from the outset, offering a free no-obligation initial consultation. Let us help you plan your financial future.

Applying for a mortgage with bad credit

Upon applying for a mortgage your lender will ask whether you have faced any past credit problems. This can be in the form of a CCJ, defaulting on loan or credit card payments or even bankruptcy.

In circumstances where you have adverse credit, such as missed repayments, your lender will often ask for extra evidence to support your claim that you can afford the mortgage as of now.

The lender may also ask to see additional bank statements or payslips, which may not have been the case when having no poor credit on file.

Alongside providing additional documents, you will need to provide the standard set of documents which are required when applying for a mortgage. Such as:

• Your total deposit amount
• Proof surrounding your salary and any other forms of income
• Details surrounding your partner’s income, when purchasing as a couple
• Details regarding all of your outgoings

Upon providing all of this information to your lender, they will be able to make a decision on whether they are able to offer you a mortgage or not.

What are some of the issues that can affect my credit score?

There are various circumstances that can affect your credit file and subsequently can lead to a poor credit rating. Some of these issues include:

• Late or missed credit card payments
• Receiving a CCJ (county court judgement) in the last six years
• Being put onto a debt management plan or IVA (individual voluntary arrangement)
• Bankruptcy
• Mortgage arrears

How to get a mortgage when dealing with bad credit?

If you are in the current position of looking to apply for a mortgage but are dealing with poor credit history, there are certain steps that can be taken to help improve your chances of being accepted by a mortgage lender.

These steps should be taken in the months leading up to your mortgage application. By doing so, you will be in a better financial situation and can often be the difference between having a mortgage application accepted or rejected.

Fixing your finances

Before applying for a bad credit mortgage, we strongly recommend delaying the process until you are in a better financial position.

If you are dealing with adverse credit or missed payments, getting these issues in order should remain the priority first.

Unfortunately for some, this could take years to accomplish. However, by doing so, it will give you access to much better mortgage deals and save you a lot more money in the long run. The more competitive the mortgage deal, the more you will save.

During the time you are getting your finances in order, you can continue to improve your credit score and increase your deposit amount.

Checking your credit history

Checking your credit report will show you where your current credit rating stands. Services such as Credit Karma and Experion will generate a credit score, based on their own criteria, to give you a general idea of your creditworthiness. Many of these services are free to use and are very useful tools when dealing with bad credit.

These credit rating services will also highlight if you have any missed payments or have received any CCJs in the last six years. Having these on your credit report will negatively impact your score.

Rebuild your credit score

Once you have recognised what exactly is negatively impacting your credit file, you can begin to work on fixing your poor credit history.

If you are facing scenarios such as late or missed payments or you have defaulted on your credit accounts, rebuilding your credit report is imperative to getting a mortgage.

The sooner you begin to rebuild your credit score, the more likely you are to be accepted for a mortgage. A healthy credit report will also lead to better mortgage deals from potential lenders.

Credit report services such as Credit Karma will often share insights into how to improve and build your credit score. Ensuring you are on the electoral vote and using a credit builder credit card are ways to improve your credit score, for example.

We recommend attempting to strengthen your credit rating a very minimum of six months before putting in your mortgage application. However, the sooner you do it the better.

Having a larger deposit

Alongside your credit score and income, your deposit size will have a huge impact on whether you will be accepted for a mortgage or not. For instance, having a very low deposit equates to stricter acceptance criteria, and vice versa.

If you are dealing with bad credit or are wanting a first-time buyer mortgage, lenders may ask for a larger deposit. Having a larger deposit leads to a lower loan-to-value (LTV) ratio, which is much more likely to be accepted by a lender and can also lead to much better mortgage deals.

Speak to a specialist mortgage broker

By speaking to a specialist mortgage broker or adviser, you will receive the appropriate advice on how to proceed with your mortgage application. A reputable mortgage adviser will do all within their power to help, even in the case of bad credit mortgages. They will know the most appropriate actions to take in these circumstances and can put you on the path to being accepted for a mortgage, even with past credit issues.

At Eden Hawk, we have assisted countless people who have dealt with bad credit history in the past in finding an appropriate mortgage. Our dedicated team will guide you towards finding the most appropriate mortgage solution, one that is catered to your individual needs whilst remaining competitive.

As a leading mortgage broker in South Wales, we are in a position to find the best solution for you. Whether liaising with specialist mortgage lenders or finding the most competitive rates for a first-time buyer mortgage, our team of experts will find the most appropriate course of action to meet your needs.

At Eden Hawk our goal remains simple: helping as many house buyers and property investors as possible. Helping to plan your financial future. Contact us today for a free no-obligation initial consultation. One of our team will be in contact ASAP, to talk through any questions or queries you may have.