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Can you get a mortgage with bad credit?

Having a big deposit in the bank and a good salary history is not always a guarantee to getting a mortgage. If you have a bad credit history, getting a mortgage can often be tricky. However, there are options, and with some research and often the help of a broker of bad credit mortgage, you may be able to secure a ‘bad credit mortgage’ also known as an adverse mortgage or subprime mortgage.

What causes bad credit?

A ‘bad credit applicant’ is a person who has a bad credit history or adverse credit history. This is determined by a range of many factors such as the following:

  • You are not registered to vote
  • You have previous county court judgments
  • You have been involved in bankruptcy proceedings
  • You have a history of defaulted credit payments
  • You have made frequent credit applications
  • You have had many credit applications declined

There is a difference between credit history and credit score, but the two are usually closely related, as lenders will review a combination of the two when deciding if they are willing to lend to an applicant.

How do you know if you have bad credit?

It might be obvious that you have bad credit because you are being chased by debt collectors or receiving frequent letters or calls from credit card companies. Or you might be totally unaware that you have bad credit until you are actually declined by lender for a mortgage.

Copy of credit report

It is advised that you obtain a copy of your credit report early in the mortgage process so that you can then take action to improve your credit score if necessary. Getting a mortgage with bad credit is often tricky but it depends on what exactly has happened in the past and the reasons behind those events. It could have been a sick child, a layoff from a job or any number of reasons.

Other problems

If you have defaulted on a credit card bill, many lenders will not be willing to offer you a mortgage; however, some will be willing to listen to the reasons behind this. Perhaps, this was a card with a small balance on it that was registered to a previous address and forgotten about. Or perhaps this was a disputed charge with an online shopping company. If you can prove the series of events and clear the outstanding charges, then a lender may be willing to assist you.

Mobile phone

Mobile phone bill disputes are quite common, and several lenders will be more than willing to overlook these if you repay what is due before your application.

Serious events

More serious events like bankruptcy or entry into an Individual Voluntary Arrangement (IVA) will often keep you out of most high street lenders until many years have passed.

Be aware

Even so, be aware that each lender has their own set of criteria, so a few improvements might make all the difference to one lender but not necessarily to another lender. We suggest you speak to our team of well qualified advisers who will have up to date information about mortgages for bad credit.

What mortgages will you be eligible for?

Although there will be many mortgages not available to you if you have bad credit, there are however some that are designed specifically for people with a poor credit history and some lenders that are specialist bad credit mortgage lenders. These mortgages are often called ‘adverse mortgages’ or ‘subprime mortgages’.

How can I borrow if I have a bad credit rating?

When applying for a bad credit mortgage, lenders are likely to work out how much you can borrow in the same way as with regular mortgages. They will take into consideration your income and any outgoings such as existing credit commitments, day-to-day living expenditures and the number of dependents you have.

About Author:

Shruti Gupta is a writer, digital marketer and outreaching expert. She writes about technology, startups & other niches. She has contributed to a number of famous websites like Thenextweb deccanchronicle and Crazyegg. Stay tuned with her at:@shruti_gupta01 or via skype : shrutigupta2811