How To Get A Mortgage With Bad Credit?

Mortgages can be daunting at the best of times, and borrowers with limited experience may not be sure how to get a mortgage with bad credit which is also know as a Adverse Credit Mortgage. When looking online mortgage searches often return results for grade A credit scores and showing mortgages that you won’t probably qualify for. Below we have put together our expert knowledge of the mortgage market to help you get the mortgage you need even if you have bad credit.

 

Get your credit files

This has to be step 1. How do you expect to know the best lender for you if you don’t know how severe your credit issues are? The strange thing is, different credit firms and banks report their information back to different reference agencies, and what’s showing with one may not show with another. So, with potential mortgage lenders using the 3 main credit reference agencies Experian, Equifax, and Call credit, if you had just your Experian credit file which says you’re clean credit, but applied to a lender that uses Equifax, you may find yourself being declined and wondering why.

For this exact reason, because the 3 files can differ massively in terms of what is actually registered, it’s vital to have a copy of each.

 

Don’t make multiple searches

Making multiple credit searches online or with your local high street bank can be extremely damaging to your score. This is because they are not catered to borrowers with adverse credit and they aim to get you credit scored as quick as possible and out the door, often with little regard to the effect it may have on your credit score. Applying with a lender that will not lend to you can be extremely damaging.

 

Find additional deposit or repair credit file and Re-apply

If you have credit issues preventing you from mortgaging at a specific loan to value (LTV), sometimes lowering the risk to the lender can help. Where it’s unlikely an applicant with a £1,000 default registered a few months earlier will get approved at 90% LTV, raising capital so the LTV is 85% may just be enough for a lender to do it.

Top Tip: One of the best things you can do to increase your credit score is to obtain an adverse specific credit card, and spend and repay in full on a monthly basis – this helps to prove you can borrow and live within your means at the same time, and you’ll notice your score improve over the coming weeks and months.

 

What credit issues are acceptable for mortgages:

Mortgages can be arrange for people with poor credit in the following situations:

  • No credit history
  • Low credit score
  • Late payments
  • Missed mortgage payments
  • Defaults
  • CCJ’s
  • IVA’s
  • Debt management Schemes
  • Repossessions
  • Bankruptcy
  • And mortgage customers with multiple credit problems