Expert Advice On Help To Buy Bad Credit Mortgages & Suitable Deals For You

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Buying a financial product such as a mortgage can be the biggest decision made in our lives. It is for this reason that impartial advice is critical from qualified advisors.

Help to buy mortgage with bad credit

A lot of potential buyers assume that a Help to Buy Mortgage is unavailable to them because they have bad credit, but in reality this might not be the case. For many people getting a Help to Buy mortgage with bad credit can be possible, even if you have been previously turned down by other lenders. 

If you need help exploring your options when it comes to bad credit mortgages get in touch with Finance Advice Centre. Our team can find the most suitable deals and lenders for your situation to give you the best possible chance of getting accepted for a mortgage to get the home you want.

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One of our advisors will then find out what you’re looking to do, discuss your options and answer any questions you may have.

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Your advisor will find the most suitable option for you and help arrange things. You then sit back and relax while we do the rest.

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From the information you provide to us, our experts will search the market and find the most suitable products for you – even if you have bad credit! If you are happy with the product on offer, we will handle all the necessary paperwork for you, including any relevant applications, to ensure that everything runs smoothly for you.

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What is Help to Buy?

The Help to Buy scheme is an initiative that the government has set up to stimulate the struggling housing market and help first time buyers and existing property owners to buy newly built properties. The scheme offers an equity loan where the government lends the borrowers money to purchase their new home. The property must be no more than £600,000 and allows the borrowing of 20% of the purchase price (up to 40% in London) with no interest for the first five years, if putting down a minimum of 5% deposit.

Payments on the government loan will only start after five years and the borrower will only pay the interest. The 20% government loan will reduce the initial mortgage repayments substantially. When reaching the end of the mortgage term or if the property is sold, the government loan needs to be repaid in full.

How does it work in practice?

If you are looking to buy a new build property that costs £250,000, the Help to Buy scheme would provide an equity loan of £50,000 (20%) and you would need to provide £12,500 (5%) which would mean your total deposit is £62,500 (25%). Then you would need to apply for a Help to Buy mortgage for the remaining balance of £187,500 (75%).

Is it possible to get a Help to Buy Equity Loan with bad credit?

Having a bad credit history can affect your chances of being approved for a Help to Buy mortgage and the lender will want to assess your creditworthiness as well as your affordability when they are considering your application.
The credit checks are applicable to your mortgage and not the equity loan itself. To qualify for a Help to Buy Equity Loan you need to be:

  • Aged 18 or over
  • A UK resident
  • A first-time buyerimage showing a house and keys for adverse mortgages

Are there Help to Buy mortgage lenders that will accept bad credit?

In short yes. Nowadays there are more and more specialist lenders in the industry who are more open to lending to borrowers with adverse credit, as well as people who are self-employed or have a more complicated income.
Some lenders will accept Help to Buy mortgage applications with negative bad credit events in their history. These events could include:

 

  • Repossession
  • Bankruptcy
  • IVA
  • DMP mortgages
  • Mortgage with a CCJ
  • Mortgage with defaults
  • Mortgage arrears
  • Mortgage with late payments
  • Mortgage with a low credit score

Also, keep in mind that mortgage lenders will have different views on bad credit. Therefore, some lenders might

be better suited to you than others. For example, certain lenders might be more lenient when it comes to having a CCJ, whereas other lenders could be more suitable if you have defaults.

How can bad credit affect how much you can borrow on a Help to Buy mortgage?

Bad credit might impact your maximum affordability as lenders will view a history of missed payments or other forms of bad credit as a risk. Typically, a lot of lenders will cap their loans at 3-4x your income, although some might consider loaning 5x your income under the right circumstances. For people with bad credit however, the majority of lenders are likely to cap the loan at smaller multiples of your income, so your monthly mortgage repayments are lower and so easier to manage.

 

Why is it beneficial to speak to an adviser before applying for Help to Buy mortgages with bad credit?

A high-quality mortgage adviser with extensive experience, like our team at Finance Advice Centre is invaluable, particularly if you have bad credit and need advice on which lenders may give you the best chance of approval for a Help to Buy mortgage.

Many mainstream lenders lack the specialist knowledge needed to effectively assess your Help to Buy mortgage application but there are a lot of specialist lenders on the market that can help. If you have questions about Help to Buy with bad credit and are looking for an expert to provide the best advice get in touch with us today.

As a mortgage is secured against your property, it may be repossessed if you do not keep up the mortgage repayments. Think carefully before securing other debts against your home.

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