Having bad credit doesn’t automatically mean you won’t get a mortgage, but it can make it tougher to get approved. You’re also likely to have fewer options available to you.

Whether you’re a first-time buyer or hoping to remortgage, if you have poor credit, using the services of an expert bad credit mortgage broker like John Charcol can help you work out all your available bad credit mortgage options and decide which one is right for you.

Let’s take a closer look at how credit works and if you can get a mortgage with bad credit.

How Does My Credit Rating Affect My Ability to Get a Mortgage?

A normal high street lender will use a credit score to assess how likely you are to be able to make mortgage repayments. The credit score they give you is calculated by looking at your financial history over the last 6 years.

For example, if you’ve missed credit card payments, you’re maxing out the credit that’s available to you, or you have a CCJ (County Court Judgement) against you, you’re likely to have a poorer credit score. Various credit reference agencies like Experian, Equifax, TransUnion and Crediva will hold this kind of information on your credit history and rating.

Although mortgage lenders will carry out their own credit assessment using the information you provide in your application, they will also include information from credit reference agencies, including bad credit events, in their assessment. This means that getting a credit score from a credit reference agency is still worthwhile, as it will give you a good indication of the overall health of your credit profile.

Due to the sheer volume of mortgage applications high street lenders receive, they’ll tend to sift out and reject those with poorer credit records in favour of those with clean records and better credit scores. This means if you have poor credit, you’re more likely to be declined for a mortgage if you go through normal high street lenders.

Can I Get a Mortgage with Bad Credit?

If you have adverse credit, you might still be able to get a mortgage through normal channels, but it largely depends on how recent and how serious the bad credit event was.

Most lenders are likely to consider you a higher risk and reject you for a mortgage if a credit event has happened recently or was serious, for example, if you’ve defaulted on several credit card or mortgage repayments in the last 12 months.

If you have bad credit, most high street banks are likely to consider you as too high a risk, in which case you'll need to seek alternative mortgage options from specialist lenders for bad credit applicants. This is where John Charcol can help.

What Are Bad Credit Mortgages?

At John Charcol, we have access to subprime/adverse credit lenders who offer mortgages for people who want to buy a house but have poor or bad credit. These mortgages are known as bad credit mortgages, subprime mortgages, or adverse credit mortgages.

Many of these specialist lenders use a manual underwriting process and look at applicants on a case-by-case basis. Although this means the application process is longer, it also provides a more rounded view of your finances and can help provide the additional assurance needed to help secure a mortgage.

Although you’re more likely to be approved for this type of mortgage, as you’ll still be seen as higher risk, bad credit mortgages tend to require a higher mortgage deposit, typically 15% compared to 5% - 10% on a normal mortgage. You’re also likely to see higher fees and interest rates on this type of mortgage.

You might have also heard of guarantor mortgages, where another person, usually a parent or relative, agrees to act as guarantor and pay your mortgage repayments if you aren’t able to. In the past, this type of mortgage was common for borrowers with bad credit as a way of providing extra assurance to mortgage lenders, but these have now largely been replaced with better specialist bad credit mortgages and deals that don’t require you to have a guarantor to be approved.

What Will a Bad Credit Mortgage Lender Assess?

When assessing applicants for a mortgage, bad credit specialist mortgage lenders will complete a manual process that looks at various aspects of a person’s financial circumstances, which might include:

  • An assessment of the borrower’s income and expenditure
  • Proof of outgoings and income - including bank statements
  • Looking at the reasons as to why the applicant fell into bad credit - e.g. was it a one-off incident like a death, divorce, or poor health that caused the poor credit problem
  • Confirmation that positive action is being taken towards rectifying the bad credit issue

Will a Bad Credit Mortgage Lender Accept Any Type of Bad Credit?

Different bad credit mortgage lenders have different criteria and an experienced adverse credit mortgage broker like John Charcol can help you navigate the different lending requirements.

Where a fairly modest credit issue is involved, such as missing low value payments on a mobile phone bill or a store card, most bad credit mortgage lenders won’t see this as having too much of an impact on your ability to repay a mortgage and will be happy to accept you, assuming you meet their other criteria. But, if you have a more serious credit issue like defaulting on high value mortgage payments, bankruptcy, or repossession, then you’ll be much more limited in the lenders that are likely to approve your application. This is one of the areas where we can help you understand what bad credit issues different lenders are likely to accept or not.

Are There Mortgage Brokers for Bad Credit?

There are thousands of people across the UK who are facing or have faced issues with bad credit in the past. If you find yourself in this category, you’re not alone and you can often still secure a mortgage, especially if you engage a mortgage broker specialising in bad credit.

Bad credit mortgages tend to be more complex, so it’s wise to seek advice from mortgage brokers who offer bespoke, specialist bad credit mortgage advice and support like John Charcol.

Best Mortgage Broker for Bad Credit

Choosing the right bad credit mortgage broker is important in making sure you understand and have access to all available mortgage options and get the necessary support throughout every stage of your mortgage application.

The best bad credit mortgage brokers should be able to offer you an end-to-end personalised service to their clients, including:

  • Genuinely independent recommendations on lenders, mortgages and other products
  • Access to the whole of the mortgage market (which only independent brokers have)
  • Special deals and exclusive offers
  • Clear and fair fees or charges for using their services
  • Experience in dealing with diverse and complex credit issues and bad credit mortgages

As a specialist mortgage broker, John Charcol provides all these services and more. We’re used to providing bespoke help to assist customers in many diverse financial situations and find the right mortgage deals. This means we’re adverse credit experts too. We’ll ask all the right questions to understand your bad credit circumstances and use our experience to help you access the best deals on the market with the right lenders.

As an independent mortgage broker, we have a broad network of bad credit mortgage lenders. Our in-depth knowledge of the different eligibility criteria means we can match your circumstances and needs to lenders who are most likely to accept your application.

Can a Mortgage Broker Help with Bad Credit Issues?

The types of credit problems individuals face can be hugely varied. This is why it’s best to speak to a bad credit mortgage broker that can offer specialist advice across many different issues that can negatively impact your credit rating and what mortgage options are available to you.

As experts in poor/bad credit mortgages, we can help identify and find mortgage solutions for credit issues like:

Can I Remortgage with Bad Credit?

Circumstances change, and it’s possible your financial situation and credit profile might have changed by the time you come to remortgage your home. If you have bad credit, it’s still possible to remortgage but you might find that your remortgage options are more limited.

As with applying for any mortgage, lenders will carry out credit checks when you apply to remortgage to check that you’re still able to pay back the mortgage. If you have poor credit, some high street lenders will automatically refuse to remortgage  and you may need to seek remortgage options from a specialist bad credit mortgage lender.

What Ways Can a Mortgage Broker Help with Bad Credit When Remortgaging?

When it comes to remortgaging with poor credit, seeking advice from a bad credit mortgage broker is a good idea to make sure you’re aware of all your options and can choose a path that’s right for you.

At John Charcol, we can help you with remortgaging credit issues, like:

How Much Should I Expect to Pay a Bad Credit Mortgage Broker?

As with most service fees, what you’ll pay for bad credit mortgage broker services will depend on their fee structure, your specific situation, what products you need, how complex the mortgage application process is, and how much you’re looking to borrow.

Your mortgage broker should make you aware of the fee you’re expected to pay once they learn your requirements and before any Decision in Principle or application is submitted.

Paying broker fees can be off-putting to some borrowers, but a good broker will be your biggest advocate and help look after your interests. Quite often, bad credit applicants feel pressured or obligated to accept a poor value product, believing they should be grateful to have any mortgage offer or that it’s the only or best deal they’ll get. But at John Charcol, we’ll help advise you the best acceptable bad credit mortgage rates given your circumstances and make sure you’re getting the right deal.

What Information Will I Need to Give My Bad Credit Mortgage Broker?

To be able to accurately assess your situation and needs, a bad credit mortgage broker will ask for various bits of information, including:

  • How much deposit you have - for a normal mortgage you would typically need 5% - 10%, whereas for a bad credit mortgage you might need 15% up to 25%. In most circumstances, the more deposit you have, the better the mortgage rates you’ll be able to secure. If you're remortgaging, you'll be able to use the equity in your property as security
  • How old you are - mortgage lenders may have an age cap and won’t lend to over 85s, for example
  • Income – how much you can borrow is based on your income, expenditure and situation
  • Expenses and financial obligations - this will include information on any dependents you have, regular outgoings and other loans or debts
  • Reasons for bad credit - if your mortgage broker understands the reasons for your poor credit - e.g. poor health and that steps have been or are being taken to resolve the issue, they can more easily align a suitable mortgage lender that is more likely to consider your application
  • The type of property you’re purchasing - it's easier to get a mortgage for standard bricks and mortar buildings, whereas you might require a lender with more flexible criteria for more unusual properties, like those with timber or steel frames or thatched roofs. This is because non-standard houses are considered to come with the risk of more complications

Most mortgage brokers will also run a soft search credit check on you from one, or all of, the big credit reference agencies. This won’t appear on your credit file but helps to understand what bad credit issues might be appearing on your profile and bringing down your credit score. If you already have your credit profile, you can also share this with your broker.

Remember that it’s important to engage your broker before you start applying for a mortgage with bad credit. If you pick a lender that’s likely to reject you or you make too many speculative mortgage applications you could negatively impact your credit rating even further.

Get Matched with the Right Mortgage Lenders

At John Charcol, we’re specialist mortgage brokers and experts in bad credit mortgages. If you have bad credit, you’ll most likely need a specialist adverse credit lender that typically only uses intermediaries like us and won’t offer bad credit mortgage deals directly to the public.

As professional bad credit mortgage brokers, we’ll take the time to understand your situation and the circumstances that led to the adverse period in your credit history and use our experience to align you with the right mortgage lenders. Whatever your credit history, we can help guide you through the mortgage process and find the best deals on the market for your situation. Call us on 0330 433 2927 to get started.

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