Can I Get A Mortgage If I Have Bad Credit?

Getting a mortgage isn’t a simple process and if you have bad credit then it can make it even more difficult. But surely you can still get a mortgage if you have bad credit can’t you? Well, you might be able to although it’s not going to be as easy and you will have fewer options.

That’s the bad news the good news is you will still at least have some options to pursue. In the past getting a mortgage with bad credit was actually easier as lenders would offer “bad credit mortgages” designed for customers with a poor credit score.

However, these kinds of mortgages are one of the main reasons the financial crash of the late 2000’s happened. And because lenders are now understandably more cautious these days you won’t find many of these mortgages available.

But like I said you will still have some options ahead of you if you are looking for a mortgage with bad credit. Let’s look at what exactly you can do if you want a mortgage and you have a bad credit score in more detail.

First Steps

The first thing you need to do if you’re looking for mortgage and suspect (or know) you have a bad credit score is actually work out how bad your credit score actually is. If you’re not sure but suspect the worst I suggest taking with a mortgage adviser to see what advice they can offer.

If you already have a lender in mind that you want to use then you should also talk to them right away. Be upfront about your credit problems and show that you are making a commitment to making them better.

If you’re lucky your credit might not be as bad as you first thought and even if it is talking with potential lenders and being open about them can still make a difference. Getting a mortgage with bad credit is more difficult but far from impossible.

Save For A Bigger Deposit

Saving for a bigger deposit is one of the most effective ways to improve your chances of getting a mortgage if you have bad credit. Most lenders will usually ask for around 5 – 10% of the properties value as a deposit, but if you have bad credit then you should try to double or if possible triple that amount.

A lender is much more likely to agree to a mortgage if you have a higher deposit even if you do have bad credit. Building a bigger deposit will take more time so you might not be able to move out as quickly as you’d like but it will certainly help improve your chances.

Best of all it will also help make the mortgage easier to handle which is certainly going to come in handy for people on bad credit. By saving up for a bigger deposit you can enjoy lower monthly mortgage payments and interest costs and it will make getting a mortgage less risky for both you and the lender.

Get A Guarantor

Saving up for a bigger deposit is a good way to tackle the issue of bad credit when it comes to getting a mortgage. But it might not be a solution for everyone, if you need to move quickly and have limited time to find somewhere or just really need to get a mortgage for any reason then you simply might not have the time to save for a bigger deposit.

But saving up a bigger deposit isn’t your only option, getting a guarantor can also be a great way to increase your chances of getting a mortgage if you have bad credit. A guarantor is a big step though and you need to be sure your guarantor is someone you can trust, it is most often a family member or very close friend.

A guarantor will be tied to you financially and will sign an agreement saying they can cover the costs of your mortgage if you are unable to. This is risky so you will need to be sure your guarantor earns enough or has a property of their own and is open to being named as your guarantor.

While getting a guarantor will help if you have a bad credit score it might not be enough for some lenders to overlook your bad credit score. It also can’t be denied that getting a guarantor is a very risky venture and might not always be worth it.

Postpone Your Mortgage Plans Till You Improve Your Credit Score

If you can’t really get a suitable guarantor then there is another good alternative to help you get a mortgage if you have a bad credit score. You should aim to fix your credit issues and take the time to get build yourself a better score.

This is ideally something you should be doing anyway but trying to improve your credit score while also handling mortgage payments can be very difficult. A bad credit score is usually caused by missed payments and debts so focus on getting those debts taken care off.

You don’t have to pay off everything to improve your credit score but if you manage to get some debts paid off then you could see your score improve dramatically. It will take a little longer to get your mortgage arranged this way but improving your credit score will be a guaranteed way to increases your chances of success when it comes to applying for a mortgage.

Financial Advice and Guidance

Finally, my last piece of advice if you’re looking for a mortgage and have a bad credit score is to go and talk to a financial or mortgage advisor. Everyone’s circumstances are different and a specialist will be able to give you personalised advice about how to improve your credit. The important thing to remember though is that bad credit doesn’t mean you can’t get a mortgage it’s going to make it more difficult but not undoable.

Leave a Reply

Your email address will not be published. Required fields are marked *