Many people wanting to buy their first home are concerned that as a first time home buyer with bad credit they won’t be able to get a mortgage to pay for their new home. The good news is that this is not true. Although bad credit could make getting a mortgage a little trickier, there are a lot of lenders who are more willing to be flexible now and who can offer different types of mortgages for those struggling with a bad credit score. A lot of lesser-known lenders specialise in bad credit mortgages and with Finance Advice Centre’s access to the whole of the market, we can find lenders to suit all mortgage needs.
There are a few things that any lender will need to consider before offering you a loan and you will need to be up-front about these details with your advisor so they can find the best deals. No matter what caused your bad credit, whether it was a missed payment, a default, or a CCJ, your lender will need to know:
- When did the bad debt happen? How long ago was it?
- How much was it for?
- What was it for? A mobile phone missed payment may not count, but a missed car payment could have a greater influence.
- Have there been attempts to settle the debt?
- How much are you able to put down as a deposit?
- What is your current income?
Where to start
Get advice from a financial mortgage advisor who specialises in bad credit mortgages. We have experience and expertise in complex and different cases and can find the best lenders for your circumstances. We can also advise you on how to manage your credit while you are planning to apply for a mortgage and buy your first home.
You can still take advantage of a number of first time home buyer programs with bad credit. Your advisor can help you understand each one, your eligibility, and how to use them.
Help to Buy Equity Loan
This is a great loan for people with bad credit. It helps people with small deposits or limited affordability to purchase their home by offering a 20% equity loan when the buyer provides a 5% deposit.
Another good way of getting onto the property ladder is to get a shared ownership property. Shared ownership works by letting you purchase a share of the house while renting the other portion. As your credit score grows and you become more financially secure you can “staircase” and purchase the remaining share of the property. 100% mortgages are available for shared ownership, meaning you won’t need to put down any deposit at all.
Help to Buy
There are different types of Help to Buy schemes available. Although these require you to put away savings, they can offer great returns, and if you are only just starting out in your house search then your advisor will be able to help you choose a scheme and use it as best as you can. This can be especially helpful if you have bad credit from a few years back but are more financially stable and able to build up a bigger deposit.