Arranging a mortgage is a challenging process, and it is easy to see why many potential buyers are left frustrated with the process. Lenders impose strict criteria when deciding who will receive a loan offer and at what rate. Many buyers with a good credit rating struggle to find an affordable mortgage, so it would be understandable if potential buyers with bad credit were concerned about their chances of obtaining a mortgage.

However, there is a growing bad credit mortgage market, and there is no reason to believe poor credit is a barrier to arranging a mortgage.

2019 had several positive features for mortgage seekers with bad credit. In April, Virgin Money said they would allow borrowers with a history of CCJs to apply for a mortgage and throughout the year more lenders have adopted a more flexible approach to help consider clients who have bad credit registered.

Arranging A Mortgage

It is possible to arrange a mortgage with bad credit

While many industry experts hope that the housing market will flourish in 2020, there is hope that potential buyers with bad credit can find support to step on to the property ladder. In the first half of the year, Brexit and the Budget will create a more transparent environment regarding the housing market, and there is no reason why people cannot aim to obtain a mortgage this year.

Top tips on arranging a mortgage with bad credit:

  1. Take steps to improve your credit rating. Sign up and review your credit report with Experian, Equifax or Check My File.
  2. Save as much of a deposit as you can. With a bigger deposit more lenders may be willing to consider you.
  3. Be settled in a home and your job, if you can. Lenders will consider heavily the long term affordability that you have for the mortgage.
  4. Be honest about your circumstances. Lenders will ask for reasons about why the bad credit was registered.
  5. Don’t apply for multiple loans and mortgages. You want to avoid unnecessary credit checks with multiple lenders. This is where advice from a good broker can really help.

If you are looking to arrange a mortgage and buy a home while having bad credit, it is best to be methodical in your process. Your first focus should be on improving your credit score. You should ensure you are on the electoral roll at your present address. You should also look to pay down your debt as much as you can.

Try to save a larger deposit

It should go without saying that the larger the deposit you can save, the more appealing your application will be to a lender. There are Government-backed schemes to assist first-time buyers to save for a home, and if you are in a position where friends or family members can help you save for a deposit, you should consider this process. Many people don’t like to discuss financial matters with their loved ones, but it may help you save a suitable deposit.

If you can show there is consistency in your circumstances, lenders will look upon your application more favourably. If you can afford to stay in your current property while you save for a deposit, and you can remain in your current job, it supports your application.

You should be aware lenders will vet your application thoroughly. If there are issues in your finances or credit history, it is better to be honest and upfront about these matters. If you are dishonest in an application, your application will likely be refused as soon as the issue is uncovered. Also, if you deliberately make false claims in a mortgage application, you may be committing mortgage fraud.

You should also minimise the number of applications you make, as applying for a mortgage is recorded on your credit report. Too many applications in a limited timeframe may be used against you, so be patient when applying for a mortgage.

If you currently have bad credit and you are looking to arrange a mortgage, it makes sense to get help. At The Money Hub, we provide specialist support for potential buyers and people looking to remortgage with bad credit, so contact us today.

For more information and advise on securing a mortgage with bad credit please complete our short form here or call us on 0203 725 5830.

DISCLAIMER: These articles are for information only and should not be construed as advice. You should always seek advice prior to taking any action.

To arrange a call back from one of our fully qualified advisers please click the button below and complete our form.

Arrange Callback