Mortgage Advice If You Have Bad Credit

8th Feb 2023

Getting a mortgage with bad credit is difficult, but it's not impossible.

This guide explains how best to apply for a mortgage when you have bad credit, and you should follow this up this by talking to impartial mortgage brokers, who will be able to advise on your situation.

Can I get a mortgage if I have bad credit?

In short, yes. It’s hard, but it is possible to get a mortgage whilst having a poor credit history. Your options might be limited, though.

Mortgage lenders perform credit checks on everyone who applies, and black marks on your credit history will stand out every time. The level of significance depends on the amount(s) of money involved, as well as how recent the incident(s) occurred.

A number of high-street banks will refuse you a mortgage if you have a poor credit history, but other corporations like building societies are more flexible There are also specialist ‘bad-credit mortgage lenders’ which focus on deals for people who have gone through difficult life events, such as serious illness or divorce.

These lenders are more flexible when it comes to considering mortgage applications, but do have higher-than-average interest rates in place and charge larger deposits.

How to get a mortgage if you have bad credit

There are still a lot of ways you can give yourself the best possible chance of being accepted for a mortgage:

Ask if your partner is in debt: your partner’s credit score is taken into consideration if you’re buying together, so get everything out in the open before you proceed.

Get your own credit in order: being able to show a history of paying in full and on time raises your credit score and tells lenders that you are reliable.

Be patient: the magnitude of blotches on your history will reduce over time, most certainly if you are much better off financially when you apply.

Be honest with lenders: mortgage lenders will find anything, so don’t try to keep things covered in hope of them brushing past it. A lying customer is an untrustworthy customer.

Explain your situation: mortgage lenders will invariably want to know why you were in financial trouble and, more importantly, what you have done to turn things around.

What is better – buying now or waiting for my credit rating to improve?

Waiting for your rating to improve means that you will have better chances of being accepted for a ‘normal’ mortgage, but that’s not to say that you shouldn’t apply now if you can’t afford to wait. We weigh up whether or not it’s worth the wait:

Having a lot of choice: customers with poor credit over 1,600 mortgage deals available to them.

You’ll become a homeowner faster: not waiting for your credit rating to improve means, more often than not, you will complete the journey to homeownership sooner.

Interest rates will be higher: having a poor credit score will mean you'll be forced to pay higher interest rates on any mortgage.

Forking out a bigger deposit: being given a mortgage whilst having bad credit comes at a cost – you’ll have to pay a bigger deposit than if you have a better score.

Remortgaging with bad credit

Like with a mortgage, it’s possible to remortgage when you have bad credit, but it is most definitely worth being patient while you improve your credit rating – if you have the time of course. This is because you can get a remortgage with high-street lenders if you have risen your credit score with a specialist lender.

The value of your home or property, the equity of it which you hold, your credit score and how much you earn are all crucial factors in whether or not you will be able to get a better rate. All lenders will also gage the affordability of your desired mortgage to ensure you will be able to make all payments.

If you are struggling to be accepted for a remortgage, you could consider another option – getting a second-charge mortgage.

For more information and to get advice on mortgages with bad credit, visit our mortgage advice page.