How to Get a Bad Credit Mortgage:
Expert Advice and Tips

Can you get a mortgage with bad credit?

Yes, it is possible to get a mortgage with bad credit, but it’s more challenging than with a standard mortgage. Lenders are likely to impose stricter conditions, such as higher interest rates and larger deposits, as they assess you as a higher-risk borrower. However, many lenders, particularly specialists, are available to work with people facing credit difficulties.

What is a bad credit mortgage?

A bad credit mortgage is a product designed for borrowers with adverse credit histories, such as County Court Judgments (CCJs), bankruptcy, or Individual Voluntary Arrangements (IVAs). Mainstream lenders typically avoid these borrowers, but specialist lenders provide solutions tailored to their needs. Despite a poor credit score, several lenders could still offer you a mortgage, using bespoke criteria that vary from one lender to another.

How do bad credit mortgages work?

These mortgages are not fundamentally different from regular ones, but they involve more detailed assessments. Rather than rejecting applicants solely based on adverse credit, lenders will evaluate cases individually, considering factors like:

• The type and severity of credit issues

• How long ago the problems occurred

• Whether the issues are still unresolved

• The cause of the credit difficulties

• The size of your deposit and the mortgage amount requested

For example, someone with older or minor credit problems may receive more favorable terms than someone with recent or more severe issues.

How can I get a mortgage with bad credit?

Securing a bad credit mortgage is often smoother with the help of a specialist broker, like those at Mortgage One. Here’s how you can increase your chances:

• We Review your credit reports: Ensure your credit information is up-to-date and accurate. Remove any errors that may affect your eligibility.

• Build up your credit: Your advisor may suggest ways to improve your credit rating, such as paying off small debts or consolidating loans.

• Prepare your paperwork: Gather key documents, including proof of address, ID, and bank statements.

• Save a larger deposit: You’ll likely need more than the typical 5-10%, so aim to save as much as possible.

• Explore family support: Options like guarantor mortgages can make it easier to get approved.

• Consider government schemes: Shared Ownership or First Homes schemes may help you qualify.

• Evaluate your partner’s credit: If applying jointly, both applicants' credit histories will be considered.

• Lower your property value: A cheaper property could allow you to make a larger deposit, easing the approval process.

What fees will a bad credit mortgage broker charge?

Fees for brokers vary based on the complexity of the application. Some brokers charge a flat fee (e.g., £300–£500) or a percentage of the mortgage amount (up to 1%). More complex cases, involving severe bad credit, may incur higher fees, paid in stages. For example, a broker may ask for £300 upon agreement in principle, £300 when a mortgage offer is in place, and the remaining £300 upon completion.

Bad credit mortgage lenders

Several lenders specialize in bad credit mortgages. At Mortgage One we speak to every Lender. Some are high street banks, while others are smaller building societies or specialist lenders. Examples include:

Eligibility criteria

Each lender has its own criteria for bad credit mortgages, and they may consider applications with a wide range of credit issues, including:

• No credit history

• Late or missed payments

• Defaults

• CCJs

• IVAs

• Bankruptcy

• Payday loan use

• Repossessions

Pros and cons of bad credit mortgages

Pros:

• Access to the housing market, even with bad credit.

• Specialist lenders consider applications on a case-by-case basis.

• Potential for credit rehabilitation if repayments are made on time.

Cons:

• Higher interest rates.

• Larger deposits required.

• Limited lender options compared to standard mortgages.

Bad credit mortgages for first-time buyers

First-time buyers with bad credit face the same challenges but can access options such as guarantor or Shared Ownership mortgages. These schemes can make homeownership more achievable even with adverse credit.

Can I remortgage with bad credit?

Yes, remortgaging is possible with bad credit, though it depends on the severity of your credit problems and the available equity in your home. Mortgage One’s specialists can assess your situation and help you find the best remortgage deal.

Interest rates to expect

Bad credit mortgages come with higher interest rates than standard products. Rates depend on the severity of your credit issues, the lender, and your deposit size, so working with a broker is essential to securing the best possible deal.

Getting expert advice

Navigating bad credit mortgages can be complex, but working with a broker significantly improves your chances of success. At Mortgage One, our advisors specialize in securing mortgages for those with adverse credit, ensuring you get the best advice, rates, and outcomes.