Mortgages with Poor Credit
For many potential homebuyers, being faced with a poor credit history can feel daunting and off-putting when considering purchasing a home. However, with the right support, you could still be able to proceed with a property purchase.
What We Do
We help applicants with adverse credit understand the risks, lender expectations and realistic pathways to securing a mortgage. By focusing on education, preparation and specialist lending routes, we're here to support you in overcoming the barriers presented by credit scores.
What is Poor Credit?
Poor credit, often referred to as adverse credit by lenders, covers a range of past financial behaviours that indicate higher risk when borrowing.
Common Forms of Adverse Credit
Poor credit may include missed or late credit card payments, defaults, County Court Judgements (CCJs), IVAs, bankruptcy, high credit utilisation, payday loan usage or making multiple credit applications in a short period. Any of these can negatively affect how lenders assess a mortgage application.
Why High-Street Lenders Decline Applications
High-street lenders rely heavily on automated systems which are designed for straightforward applications. When adverse credit appears on a credit report, these systems often trigger an automatic decline, regardless of the applicant’s current financial stability. An automatic decline on a lending assessment can also then have further negative impact on a credit score, so it is important to properly evaluate applications before submitting them.
The Cost of Poor Credit
Even when a mortgage is approved, adverse credit usually results in more restrictive and expensive borrowing options.
Higher Interest Rates and Fewer Products
Specialist lenders who typically approve borrowers with adverse credit charge higher interest rates to offset risk. A borrower with a clean credit check may secure a mortgage at a significantly lower interest rate than someone with recent defaults or CCJs, potentially adding tens of thousands of pounds in interest over the mortgage term.
Large Deposit Requirements
Applicants with low credit scores as a result of an adverse borrowing history are often required to provide a larger deposit, sometimes 20–25%. This reduces the specialist mortgage lender’s risk but can be a major hurdle for borrowers who are already struggling to save, particularly if stamp duty is a factor in the home purchase.
Our Services
We'll help you submit mortgage applications that avoid the common mistakes which can further damage your credit score and harm mortgage prospects.
Avoiding Multiple Credit Searches
Applying to multiple lenders in hope of approval can seriously harm your credit score and limit your access to a mortgage. Each hard search leaves a footprint on your credit file, creating a cycle of declining creditworthiness. Working with one of our mortgage experts helps to target the right lenders and limits unnecessary searches to get you started on the right journey towards home ownership.
Overcoming Fear and Misinformation
Many people of varying incomes are deterred from making a mortgage application due to bad credit or misunderstanding their options or credit limits. With the right advice, adverse credit does not have to mean the end of homeownership ambitions. Our team is experienced in helping you properly evaluate your mortgage options, finding ways of overcoming bad credit and helping you to secure your dream home.
Key Takeaways
Applying for a mortgage with credit issues does present challenges, including automated rejections, higher interest rates, larger deposit requirements, and the risk of further credit damage. However, poor credit is not permanent. By taking time to review and improve your credit report and seeking specialist advice from our team of mortgage advisers, you can significantly improve your chances of attaining a mortgage.
