Don't let past financial difficulties stop you from owning a home. Our specialist advisers can help you secure a mortgage even with a less-than-perfect credit history.
Securing a mortgage when you have bad credit requires careful preparation and presentation of your finances. Here's our step-by-step approach to helping you get the right mortgage:
We'll help you obtain and review your credit reports to understand exactly what issues are affecting your credit score and how lenders might view them.
Based on your income, deposit, and credit situation, we'll provide a realistic assessment of how much you might be able to borrow and what rates to expect.
We'll search the market for specialist lenders whose criteria match your specific circumstances, focusing on those most likely to approve your application.
We'll help you gather all necessary documentation and prepare explanations for past credit issues to present your case in the best possible light.
We'll submit your application to the chosen lender and liaise with them throughout the process, addressing any questions or concerns that arise.
Once approved, we'll guide you through to completion. We'll also advise on how to rebuild your credit for better mortgage options in the future.
A bad credit mortgage is a home loan specifically designed for borrowers with credit issues in their financial history. While traditional lenders might decline applications from those with poor credit scores, specialist lenders offer mortgage products tailored to accommodate various credit challenges.
'Bad credit' can encompass a range of financial issues, including:
The main differences between bad credit mortgages and standard mortgages lie in the assessment criteria, terms, and costs. While standard mortgages primarily focus on income and credit score, bad credit mortgages take a more holistic approach, considering:
While bad credit mortgages typically come with higher interest rates initially, they provide a pathway to homeownership that might otherwise be unavailable. With time and demonstrated financial responsibility, many borrowers can later refinance to more favorable terms.
Different credit issues affect your mortgage application in various ways. Understanding how lenders view these issues can help set realistic expectations about your options.
Occasional late payments may have a minor impact, especially if they're older. Recent or frequent missed payments will have a more significant effect but are still manageable with the right lender.
Impact Severity: Low to Moderate
CCJs remain on your credit file for six years. Satisfied CCJs (those that have been paid) are viewed more favorably than unsatisfied ones. The age, value, and reason for the CCJ all factor into lenders' decisions.
Impact Severity: Moderate
Active DMPs may limit your options, but some specialist lenders will consider your application, especially if you've maintained the plan successfully for a period. Completed DMPs demonstrate financial responsibility.
Impact Severity: Moderate
IVAs are a formal debt solution that stays on your credit file for six years. Some specialist lenders will consider applications from those with completed IVAs, with more options becoming available as time passes.
Impact Severity: High
Bankruptcy is considered one of the most severe credit issues. However, it doesn't permanently prevent you from getting a mortgage. Specialist lenders may consider applications 3-6 years after discharge.
Impact Severity: Very High
Previous home repossession is a serious credit issue for mortgage lenders. However, with time and financial recovery, some specialist lenders will consider your application, particularly if there were extenuating circumstances.
Impact Severity: Very High
While we specialise in finding mortgage solutions for those with credit challenges, there are several steps you can take to strengthen your application and potentially access better rates:
A larger deposit (15-25% or more) can significantly improve your chances of approval and help secure better interest rates, as it reduces the lender's risk.
Review your credit reports from all three major agencies (Experian, Equifax, TransUnion) to ensure accuracy. Dispute any errors and provide explanations for legitimate issues.
Demonstrate responsible credit management by making all current payments on time. Avoid taking on new debt or making multiple credit applications before applying for a mortgage.
Ensure you're on the electoral roll at your current address. This simple step helps verify your identity and improves your credit score.
If possible, allow time between credit issues and your mortgage application. The impact of credit problems diminishes over time, especially if you demonstrate good financial behavior.
Establish a pattern of regular savings alongside managing your debt repayments. This demonstrates to lenders that you can manage your finances responsibly.
At Friends Capital, we specialise in helping clients with credit challenges secure mortgage financing. Our expertise and relationships with specialist lenders allow us to find solutions where others might not. We can provide:
We understand that past financial difficulties don't define your future. Our non-judgmental approach focuses on finding solutions rather than dwelling on past issues. With our expertise in bad credit mortgages, we can help you take that important step onto the property ladder or secure a remortgage despite credit challenges.
Get answers to common questions about mortgages for those with credit challenges.
Can I get a mortgage with a County Court Judgment (CCJ)?
Yes. Many specialist lenders will still consider your application, particularly if the CCJ has been satisfied (paid off). The value, age, and reason for the CCJ all affect which lenders will accept you, and having a larger deposit can help.
Can I get a mortgage after bankruptcy?
Yes, though it's one of the more serious credit issues. Most specialist lenders want to see 3-6 years since your discharge date, along with evidence that you've managed your finances responsibly since. We work with lenders who specifically consider post-bankruptcy applications.
How long do missed payments or defaults affect my mortgage application?
Most negative credit information stays on your file for six years, but its impact reduces over time. A default from five years ago carries far less weight than one from five months ago, and lenders are generally more forgiving the further in the past it is.
Will I need a bigger deposit if I have bad credit?
Usually, yes. Specialist lenders for bad credit mortgages typically ask for a deposit of 15-25%, compared to 5-10% for standard mortgages. A larger deposit reduces the lender's risk and can also help you access better interest rates.
Will I pay a higher interest rate with a bad credit mortgage?
In most cases, yes, at least initially. Rates reflect the lender's increased risk. However, many borrowers can remortgage onto more competitive rates after 2-3 years of demonstrating good payment history.
Can I improve my chances of getting approved?
Yes. Checking your credit report for errors, registering on the electoral roll, saving a larger deposit, and avoiding new credit applications before you apply can all strengthen your case. We can review your situation and advise on the most effective steps for you specifically.
Our specialist advisers understand credit challenges and can help you find mortgage solutions tailored to your unique situation. Take the first step toward homeownership today.
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