Guarantees aren’t possible in the world of mortgage lending. No mortgage lender or broker will give you guaranteed approval with bad credit – or excellent credit for that matter.

Until your mortgage is officially approved, a lender can still change their mind as more checks are completed and information on your credit history is gathered, even if they’ve approved your mortgage in principle via a DIP (decision in principle).

Of course, the better your credit profile, the more straightforward you’ll likely find the process, but that doesn’t mean you won’t get a mortgage approved if you have bad credit.

With bad credit, the range of mortgage deals available to you will certainly be more limited, but this is where a bad credit mortgage broker can help. Expert brokers, like John Charcol, can give you the best chance of securing a mortgage by pairing you with a specialist adverse credit lender that can offer you a route into buying a house even with bad credit.

Let’s find out more about getting mortgage approval with bad credit, what options might be available to you and how we can help.

What Is Bad Credit?

There are various factors that can negatively impact your credit profile and result in a bad or poor credit rating. Most commonly, bad credit is associated with making late payments or missing payments on credit cards, mortgages, other personal loans, or even store cards or utility bills.

Other factors that can affect your credit score include:

  • Having little credit history - if you haven’t used credit, it’s harder to prove that you can be a responsible borrower and make repayments. It’s likely you’ll have more on your credit profile than you first thought, so it’s worth checking with credit reference agencies like Experian to get an idea of your overall credit record
  • Having a short credit history - this can also negatively impact your score as it’s harder to prove you have a strong track record of reliable financial management. Your credit record shows the last 6 years of your credit activity
  • Not being on the electoral register - the simple act of joining the electoral register proves where you live and is important for your credit score
  • Legal action resulting in you being ordered to pay money to another person -commonly a County Court Judgement (CCJ)
  • High credit utilisation - your credit utilisation is a measure of how much of your available credit you’re using. If you’re consistently maxing out your available credit - e.g. using 100% of your overdraft and credit card allowances, this will be viewed negatively by lenders. Ideally, your credit utilisation should be below 30%

Can I Get Approval for a Mortgage if I Have Bad Credit?

It’s certainly not impossible to be approved for a mortgage loan if you have bad credit, but it will prove to be a little more difficult. You’re likely to have more limited mortgage options and, because you’ll be seen as a higher risk, any mortgage you secure will likely be more expensive if you had a good or excellent credit history.

Whether you can get a mortgage with bad credit will largely depend on the bad credit event, when it occurred and how severe it was. If the event was mild, such as a missed payment on a utility bill 2 or 3 years ago, then most mortgage lenders are more likely to see this as having minimal impact on your ability to repay a mortgage and will therefore consider you.

The more recent and serious the credit issue, the less likely you are to be approved. If for example, you recently defaulted on your mortgage payments or had a serious event like repossession or bankruptcy, then fewer lenders are likely to consider you for a mortgage and you’ll almost certainly need a specialist adverse credit lender that works through intermediaries like John Charcol.

In days gone by, having a guarantor was the most common, and sometimes only, way for a bad credit applicant to get a mortgage. But the good news is that bad credit specialist mortgage lenders now offer diverse bad credit mortgages and deals. These cover various poor credit issues that mean a guarantor – and a guarantor mortgage – is no longer needed and largely doesn’t exist in the mortgage market now.

How Easy Is It to Get Mortgage Approval with Bad Credit?

Through normal borrowing channels like high street lenders, it can be difficult or nearly impossible to get mortgage approval with bad credit. For most high street lenders an automated credit check process is applied.

Your broker will normally fill out a questionnaire with information about your financial situation and data from credit reference agencies like Experian, Equifax, TransUnion or Crediva will be used to check your credit profile and flag any adverse credit events. In short, this means your credit profile will be used to assess how likely you are to make your mortgage repayments and how big a lending risk you are.

The high volume of applications high street lenders receive means they can afford to be choosy and often will sift out and decline applicants with a poor credit profile, in favour of those with better credit scores and a clean profile.

But it’s not a hopeless cause. If you use an expert bad credit mortgage broker, you’ll have more mortgage options and avenues open to you. Even with bad credit, using a mortgage broker can help you access the right specialist lenders that are more likely to approve you for a mortgage and can offer the most favourable rates for your circumstances.

What Are Bad Credit Lenders?

Whether you’re a first-time buyer with bad credit, or you’ve had a recent adverse credit event just as you’re looking to remortgage, a bad credit lender will often be your best option for securing a mortgage.

Adverse credit lenders have more lenient criteria than most high street lenders; they won’t simply dismiss you because you have bad credit on your profile. Some adverse credit lenders may even be able to consider lending to you if you don’t meet their standard criteria due to a life event or error causing the credit blip.

Although you’re more likely to be approved for a bad credit mortgage through a specialist lender, bear in mind that this lender is accepting you even though you’re still be seen as higher risk, and this comes with additional costs. With a bad credit mortgage lender, you should expect to pay higher fees and interest rates on your mortgage loan. Depending on your circumstances, you might also need to provide a higher mortgage deposit, typically 20% - 25% (compared to 5% - 10% on a standard mortgage), in order for the lender to approve you for a mortgage loan.

Often, bad credit lenders don’t offer their specialist mortgage products directly to the public and only operate through intermediaries like John Charcol. This means you may need a broker to access mortgages with bad credit lenders and to help you through the mortgage approval process.

As an independent and experienced adverse credit mortgage broker we have access across the whole mortgage market and can help you find the best mortgage deals with the right specialist adverse credit lenders.

How Does a Bad Credit Lender Assess Your Eligibility?

Bad credit lenders often have more lenient criteria than high street lenders when it comes to credit and a few are even able to take a more personal, bespoke approach and look at different aspects of an individual’s financial situation.

In some circumstances, some will be assess your eligibility on a case-by-case basis and look at various factors, including:

  • Proof of income and outgoings, including bank statements and tax returns
  • An assessment of your income against your expenditure
  • The reasons why the bad credit occurred in the first place - e.g. was it due to an issue of poor health, a family death or divorce that caused the adverse credit event?
  • Evidence that positive steps have been or are being taken to resolve the bad credit issue
  • Different options available to you that might help improve your current financial situation

Can I Get Approval for a Bad Credit Mortgage for Any Type of Bad Credit?

Adverse credit mortgage lenders will have varying criteria that they apply to an applicant, and an experienced adverse credit mortgage broker can help you understand the different lender criteria and which lender is right for you.

Just like any lender, bad credit lenders won’t automatically approve or guarantee you a mortgage, but may be able to take a closer, more contextual look at your financial situation and not reject your application purely based on an initial review of your credit profile.

If your adverse credit issue is relatively straightforward and modest in nature, like a small, missed payment on a bill or store card, then most lenders - including some high street ones -  will see this as a low impact issue that won’t prevent them from offering you a mortgage.

However, where you have a more serious credit issue like bankruptcy or defaulting on your mortgage, then you’ll be more limited with regards to the lenders that will consider you for a loan. You’ll likely need one of these more specialist adverse credit lenders who is happy to look into the circumstances surrounding these types of bad credit events. This is one of the areas where we can help you navigate the different types of adverse credit issues that different lenders are likely to accept or not.

Can I Get Approval for a Bad Credit Mortgage Online?

As with most services these days, a lot of discussion and paperwork can be done virtually, over the phone or online. Even if your situation is complex, brokers and lenders will be able to work with you over the phone and online and can even accept documents and applications via online portals or sent via email.

As adverse credit mortgages tend to be more complex, it’s best (and sometimes only possible) to go through an intermediary, like John Charcol, who offer specialist bad credit mortgage advice and can work with the right lenders to best support you through the application process.

Can I Get Approval to Remortgage with Bad Credit?

You might find that when you come to remortgage, your financial situation and credit profile have changed from when you first had your mortgage approved. It’s important to note that your mortgage won’t be automatically renewed and you’ll have to go through credit checks when you apply to remortgage to show that you can afford your new mortgage repayments.

If you have bad credit, it’s still possible to remortgage and proving that you’ve made all your previous mortgage payments will strengthen your case, but you may have more limited remortgaging options.

Some high street lenders will automatically reject a remortgage application where there is an adverse credit issue, and you may need to look at other remortgage options from a specialist adverse credit mortgage lender. Lenders will have varying criteria, some may not accept an applicant with any late payments in the last year, whereas others will accept one missed payment in the last few months. This is where we can help with understanding lender criteria and accessing deals not found on the high street.

Mortgage brokers can also be helpful in other remortgaging situations. For example, if you’re looking to remortgage to pay off or consolidate debts, brokers can advise and find you the best lenders. Brokers can also advise you if your current fixed mortgage is coming to an end and you’re concerned about getting a new mortgage deal with a recent adverse credit event on your record.

Depending on your situation, it may also be worth considering a product transfer which is where you apply for a new deal with your current lender.

Speak to one of our expert mortgage advisers if you’re worried and would like more advice about how to remortgage with bad credit or whether a product transfer could be an option for you.

How Can a Bad Credit Mortgage Broker Help Me?

As an independent mortgage broker, we have lots of experience in helping people with bad credit secure mortgage loans. We know all about bad credit events and which lender to approach depending on your unique circumstances. We’re whole of market which means we have access to specialist adverse credit lenders who will only operate through intermediaries.

If you’re in a more unusual or complex situation, like having poor credit with a shared ownership scheme, bad credit mortgage brokers can be especially helpful in advising you on what options may or may not be open to you.

An expert adverse credit mortgage broker, like John Charcol, can support you in many ways, including:

  • Providing expert advice on diverse bad credit issues and mortgage needs and how to navigate the adverse credit mortgage market
  • Understanding lender criteria and helping you find the best lenders for your situation
  • Providing access to special bad credit mortgage loans that offer the best value for your circumstances
  • Supporting you through the entire application and mortgaging process
  • Suggesting ways to strengthen your application and rebuild your credit score
  • Helping you to understand and answer lender queries and requests
Mortgage Types

When Should I Speak to a Bad Credit Mortgage Broker?

It’s always wise to seek advice and engage a bad credit mortgage broker before you start applying for mortgages with poor credit. If you pick a mortgage lender that’s likely to decline your application or you make lots of speculative mortgage applications you could accidentally end up negatively affecting your credit rating even further.

As a specialist mortgage broker, our team at John Charcol are adverse credit experts. We’ll ask the right questions to understand your bad credit history and use our expertise to help you access the best deals on the market with the right lenders who are most likely to consider you for a mortgage. With our help, bad credit needn’t mean missing out on mortgage approval or accepting a poor value mortgage offer. Contact us today on 0330 433 2927 to learn more.

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