Getting a mortgage with bad credit – is it possible?

Buying a home in today’s market can seem particularly hopeless for people with poor credit scores – and that’s before you have to cough up large deposits.

Even people with exceptional credit histories can be tripped up when lenders run through affordability, earnings and monthly outgoings with a fine-tooth comb and identify red flags.

There are stories of people being rejected because they’ve never been in debt – so even though they’ve kept their noses clean, because they’ve never had any form of credit, there just isn’t enough information for lenders to lend.

Wait, before you go clicking off this article, it’s not all doom and gloom – these factors aren’t a reason for people to simply abandon their homeowner dreams. There is still hope; even if you do have a poor credit score, CCJs, missed payments, or little to no credit history, and we’re going to share some pointers with you.

If you’ve already been rejected, do not give up straight away

Each lender applies differing criteria when lending, and with hundreds of lenders available to choose from in the UK, it really is worth seeking some expert independent advice. What one lender may find unacceptable, another can be absolutely fine with. If you have been rejected by one lender, it is important to understand that your journey to owning a home hasn’t come to an end – in fact, you’re only just getting started.

For advice on potential lenders that suit your circumstances, you may want to seek the help of a specialist broker with experience of securing bad credit mortgages for people like you. We’d recommend a bad credit mortgage at Simply Adverse due to their 5 star reviews and range of services specialising in bad credit history. However, you can opt to find your own mortgage expert if required for advice.

Remember, bad credit or a poor credit score isn’t for life – it may even not be bad for very long

Credit scores are constantly changing and are updated monthly. By acting now on any recurring issues that have been flagged up by one or multiple mortgage lenders, you can rectify them and improve your future chances of acceptance.

You can use credit report providers to check your credit file, such as Equifaxor Experian, to gain a better understanding of your overall score and get hold of your financial history – this can open a gateway to help you to correct any issues with your credit.

Even if you have CCJs or bankruptcies (although more serious than simple missed payments), they will eventually be removed from your credit file over time, so if you have any of these blemishes on your credit file all is not lost. Plus, specialist brokers can often find you a mortgage even with adverse credit history.

Get Saving

Another big factor to mention is that the larger your initial deposit on a home, the more options you’ll have when it comes to finding a suitable lender due to a reduction in the mortgage loan required and, consequently, a lowered risk for the lender. If you can get together around a 20-30% deposit then you’re really opening up your mortgage options – so get saving.

Look at buying schemes that can expedite the home buying process

It’s worth noting that are also a great range of home buying schemes that can help you get a foot on the property ladder.

Some of these include:

Right to Buy

Tenants in England, Northern Ireland and Wales who rent a home from the council, may be able to buy their home at a discounted cost.

You will need to have been renting the property for a minimum of 3 years and there may be other qualifying criteria that will vary depending on each council, so it’s best to contact them and find out more. More information on Right to Buy mortgages here.

Shared Ownership

A shared ownership scheme is where you essentially buy part of a home from the council or a housing association and then rent the remaining share in the property.

You’ll need a mortgage for your share, although shares can be as little as a quarter and up to three quarters of the value of the home.

You will then be given an option to purchase the home further on down the line – but this at least gets you on the property ladder. If you work in some sectors, such as for the NHS or in teaching, you may be able to access special key worker schemes.

Other schemes

There are a range of other schemes to choose from including the Lifetime ISA and the Help To Buy scheme, we encourage you to read up on the different buying schemes to find one that is appropriate to your individual circumstances.

One thing is for sure, although buying a home with bad credit may initially seem impossible, there are always routes and options to owning your own home. It may require patience, some good research skills or specialist help, but in the end, it will all be worth it to realise your dream of being a homeowner.