Adverse Credit Mortgages – How to Buy a Home with Bad Credit


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We’ve all got a past, and something like bad credit can follow you around for a long time. A history of adverse credit can affect your chances of getting a mortgage, but it by no means makes it impossible to get one. So if you’re dreaming of buying your own home, don’t get discouraged. 

We’ve put together the guide below to help you understand the process of getting a mortgage with bad credit. After you’ve read through it, your best bet is to talk with a mortgage broker experienced in working with people in your situation. Without further ado, let’s jump right in.

What causes bad credit?

There are many things that can negatively impact your credit score, and not all of them are created equally. Naturally, lenders will place much less weight on a single missed phone bill than regularly missed payments. 

Similarly, something like a missed utility bill from a year ago will carry much less weight than if the same missed payment was from last month. Unsurprisingly, a missed mortgage payment will also carry more weight in the eyes of a lender than most other things.

Decrees, trust deeds and bankruptcy all carry long-lasting, serious consequences to your credit score and provide the biggest challenges to getting a mortgage. However, qualifying for one in these situations is not impossible.

It’s worth noting that there’s no such thing as a universal credit score, and each lender will use their own criteria to decide whether to approve your mortgage application. That being said, online credit score services can be helpful for getting a rough idea of your credit situation. There are a number of free services such as Experian and Clear Score available online to provide you a rough estimate of your credit score.

Can I get a mortgage with bad credit?

In short, yes. However, you might need to pay higher fees and interest rates and get together a larger deposit when buying a house to do so. Often, people with poor credit history can expect to have to put down a 25% deposit at a minimum to qualify for a mortgage. Additionally, you’ll likely have to provide payslips and expenses from a longer time period to prove you can afford your mortgage repayments.

High street banks tend to have the strictest lending criteria, while building societies are slightly more lenient. Specialist or niche lenders may be your best bet as they have more flexible underwriting criteria. 

Here are some ways you can increase your chances of getting approved:

  • Get a guarantor. You both have to consider the implications of this arrangement since if you can’t pay, your guarantor will be asked to do so, and if they can’t, their home may be repossessed.
  • Have a family member to gift your deposit – this can’t be a loan, but there’s nothing to prevent you from gifting back the money later down the line.
  • Consider your partner’s credit score, as both will be taken into account if you’re buying together.
  • Have an explanation for black marks in your credit history – ones due to something like illness or redundancy will be looked on with more leniency if you can prove your situation has since improved.
  • Always be honest – trying to hide adverse credit is a major red flag in the eyes of lenders.
  • Giving it time and repairing your credit – we’ll give some tips for this later on in the article.

Can I remortgage if I have bad credit?

Again, the answer is yes – but with caveats similar to the ones mentioned in the previous section. 

If you have a history of bad credit but some time has passed, it may be worth it to remortgage to save some money once you’ve had a chance to improve your credit and build more equity in your home. 

Make sure to take into account the costs associated with remortgaging before doing so, as this will have an impact on how profitable it is to change mortgage products.

Getting a mortgage now vs. waiting

There are pros and cons to both options. If you choose to forgo waiting to improve your credit score before applying for a mortgage, you’ll of course not have to wait as long to move house – and time can be a luxury you can’t afford, especially if you’re moving for a job going through something like a separation. 

And as properties in Scotland steadily grow in value, you’ll also likely be able to get a property for cheaper than you would if you gave it a year or so. On the other hand, this will also mean needing a higher deposit and paying higher interest rates so you might end up spending more money in the long run.

Meanwhile, waiting means you have time to fix credit issues while also saving up for a bigger deposit. Keep in mind that fixing your credit score takes time – it may take six months for changes you’ve made to actually show up when a credit check is carried out on you.

A bad credit mortgage broker will be able to advise you on the mortgage products you’re likely to qualify at present and whether you’d be better off waiting before getting a mortgage.

What you can do to improve your credit score

If you opt to wait a while to work on your credit score and save up for a bigger deposit, here are some things you can do:

  • Get on the electoral register
  • Close any credit cards you don’t use
  • Pay utility bills on time
  • Don’t miss repayments for loans and credit cards
  • Set up direct debit s so that bills are paid automatically
  • If you’ve gone through a breakup, ask for a notice of disassociation from their credit score from credit reference agencies

Getting help from an adverse credit mortgage broker

As we stated at the start of this article, working with a mortgage professional is your best bet when trying to get an adverse credit mortgage. The right mortgage broker will have access to a wider range of mortgage products and take advantage of their professional relationships with a wide variety of more niche lenders.

Our Edinburgh mortgage broker service has helped people with all kinds of financial backgrounds fund their dream homes. Read more about what makes Cox & Co on our mortgage brokerage page.

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