Buying A House With Bad Credit

For anyone wanting to buy a house, one of the first things to consider is credit scores and how a credit score affects the mortgage lenders willing to offer a loan. Buying a house with bad credit can make the process more difficult, and lenders may have more requirements, but it is possible. Finance Advice Centre know that bad credit isn’t always a sign of bad money management and we have the resources, contacts, and knowledge to help potential homeowners get onto the property ladder.

Bad credit may have been caused by CCJs, missed payments, having an IVA, being declared bankrupt, or even having a home repossessed in the past. There is a limit of time these will stay on a credit score, but we can offer the best advice on how to buy a house, even with a bad credit score. 

Bad Credit Mortgages

Strictly speaking, there is no such thing as a “bad credit mortgage”, instead, there are lenders who are more likely to offer home loans for bad credit. These loans are also referred to as subprime mortgages or adverse credit mortgages, and  will likely have higher interest rates, require larger deposits, or have more requirements from the applicant for payslips and other forms of proof that the loan will be repaid.

It is recommended that anyone applying for a bad credit mortgage should be earning more than £15,000 per year and should be able to pay for at least a 15% deposit on the property they are purchasing. Keep in mind that this helps the lander as well as the borrower – it is in the lender’s best interest to get their money back, which means they want the applicant to be able to make payments! Bad credit mortgages are designed specifically to help people who might have struggled in the past with payments.

Applying for a Bad Credit Mortgage

At Finance Advice Centre, we have access to “whole of the market”, meaning we can access all lenders including high street banks, “challenger banks”, and building societies. We can find the best deal from a country-wide selection of lenders. Not only do we have access to all these lenders, we also have the knowledge to advise you on which mortgage is best suited to your situation. Different lenders have different credit score thresholds, requirements, and policies. With our experience and expertise we can find the lender right for you.

Our expert team loves working with complex mortgage cases and have specialised in helping our customers get excellent mortgages for bad credit or in difficult situations.

You can get advice and assistance from us in three easy steps:

  1. Call us on 01332 821 340, chat to us on our Zendesk Chat, or fill in a contact form and let us get back to you
  2. One of our trained advisors will talk to you about your needs, your circumstances, and what you are wanting to do. We will discuss your options and answer any questions you might have
  3. Your advisor will look for the best lender for you and will either contact you to discuss options going forward or complete the application for you! All you need to do is relax and let us find you the best possible deal.

Interest Rates with Bad Credit

Although it is likely that interest rates will be higher than normal on a bad credit mortgage, lenders are offering better deals now with decreasing interest rates for people who pay on time and are able to maintain a good credit record for a few years. After a few years it is even possible to switch to a mortgage with standard rates if payments have all been prompt and paid in full.

There are a lot of factors that lenders must consider before offering a home loan, and rates are not all fixed. A Decision in Principle is needed before applying for a loan and even then, a mortgage may not be immediately available. To help you navigate your way through applications and the various interest rates that might be available, we offer comprehensive advice and up-front and honest discussions. We ensure you are fully informed throughout the process and all your questions are answered.

Preparing for a Bad Credit Mortgage Application

Although it can take a few years to work a credit score back up again, there are small things that can be done to improve a credit score short term and make your application more attractive to potential lenders. It is always best to be fully prepared, and the best way to do that is to get everything together that you might need to support your application.

  • Make a real effort to repay any debts
  • Look through your contracts and remove old or unnecessary ones
  • Re-evaluate the necessity of a shared account if it is affecting your credit score

With a bit of work and a little help from Finance Advice Centre, we can find the right mortgage for you.