A quick overview on Bad Credit Mortgages
Securing a mortgage when your credit file is less than perfect can be difficult, but a bad credit mortgage could help. They have stricter criteria and can be more costly than standard mortgages, but if you’re in a hurry to buy a home, they could be just what you need. No matter what type of adverse credit you have, there are lenders who will consider your application.
You can find out more in our guide to bad credit mortgages.
How do bad credit mortgages differ from standard mortgages?
Bad credit mortgages are not a specific type of product, any deal approved by lenders that accept applicants with credit issues could be considered a ‘bad credit mortgage’. However, the terms and criteria tend to differ, as follows:
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Higher interest rates
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Lower LTV available in some cases
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A higher deposit is usually required
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There are fewer lenders willing to offer bad credit mortgages
Deposit requirements and other criteria
Bad credit mortgages tend to be bespoke to the individual applicant’s circumstances, so the deposit requirement will vary quite a lot. However, you’ll usually need a larger deposit than for a standard mortgage, and this requirement is likely to rise with the severity of the credit issue.
Lender criteria vary considerably in terms of what type of credit issues they accept, the age of them, and in some cases, the value of any debts related to the credit issue. Those with less severe issues such as County Court Judgment (CCJ) or Defaults will typically have access to more lenders than borrowers with a Debt Management Plan (DMP), Individual Voluntary Agreement (IVA) or more serious credit issues.
This table shows approximately how many lenders may be available to you, based on the type of credit issue(s) you have.
|
Credit Issue |
Approx Number of Available Lenders |
|
Default up to 3 years old |
Up to 60, depending when it was registered, whether it’s satisfied and the amount of debt |
|
CCJ up to 3 years old |
Up to 60, depending when it was registered, whether it’s satisfied and the amount of debt |
|
Active DMP |
Up to 25 depending on the standing of your Debt Management Plan |
|
Active IVA |
Up to 16, depending on the standing of your Individual Voluntary Agreement |
|
Active DRO (Debt Relief Order) |
Up to 14 |
|
Bankruptcy discharged within the past 3 years |
Up to 9 |
|
Repossession within the past 3 years |
Up to 5 |
Featured Articles
A Complete Guide to Bad Credit Mortgages
How to get the best mortgage deal with bad credit
Getting a Mortgage With a Debt Management Plan
Getting a mortgage with a debt management plan on your file
Remortgaging With Bad Credit
How to refinance with adverse credit against your name
Getting a Mortgage With an IVA
How to get approved for a mortgage with an IVA
Bad Credit Mortgage Calculators
Find out how much you can borrow with bad credit
Getting a Mortgage With a County Court Judgment (CCJ)
How to get a mortgage with a CCJ
Getting a Mortgage After a Bankruptcy
How to get a mortgage with a bankruptcy on your files
Getting a Mortgage After a Repossession
Your mortgage options if you have had a past repossession
Bad Credit Buy-to-Let Mortgages
Getting a buy-to-let mortgage with adverse credit
Getting a Joint Mortgage With One Bad Credit Applicant
How to get a joint mortgage with one bad credit applicant
Getting a Mortgage With Late or Missed Payments
How late/missed payments can impact mortgage applications
Getting a Shared Ownership Mortgage With Bad Credit
A guide to bad credit Shared Ownership mortgagesMore Articles Related to Bad Credit Mortgages
Bad Credit Mortgage Deposit & LTV Requirements
Finding The Best Bad Credit Mortgage Broker
Getting a Mortgage With a Debt Relief Order
Getting a Mortgage With a History of Arrears
Getting a Mortgage With a Low Credit Score
Getting a Mortgage With Defaults
Getting a Right to Buy Mortgage with Bad Credit: Step by Step
FAQs
There are a number of things you can do to improve your creditworthiness before making an application, but not all of them will make an immediate difference. It’s a good idea to read our tips to improve your credit a few months before you apply, to give these steps the best chance of working for you.
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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY.
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