How to get a mortgage with bad credit

A bad credit rating can be a significant obstacle to having a mortgage application approved. All is not lost, however, because specialist bad credit mortgage brokers like Think Plutus can help. With Whole of Market access, we can find a bad credit mortgage for you and help with the entire process to give you the best chance of getting a mortgage.

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how to get a mortgage with bad credit

What is a bad credit mortgage?

A bad credit mortgage is often known as an adverse credit mortgage or a sub-prime mortgage. They are designed for applicants who have a bad credit rating. If you're looking for a mortgage lender that will accommodate people with bad credit, chances are you've found it difficult so far.

Perhaps you just missed a few payments on a loan or have a default. Maybe you had a County Court Judgment (CCJ) made against you. You might even have been declared bankrupt, or be in a Debt Management Plan (DMP) or IVA. Whatever caused your credit score to dip, it makes it more difficult to be approved for a mortgage.

A bad credit mortgage is a good option for people trying to get on the property ladder who have been refused a mortgage elsewhere due to a poor credit history. They can also be helpful for homeowners and movers whose financial situation is no longer the same as when they took out their previous mortgage.

These mortgages work just the same as your standard mortgage. The amount you borrow is gradually paid back to the lender in monthly instalments, with interest added.

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How bad credit mortgages differ from other mortgage types

The key difference between a bad credit mortgage and other mortgage types is that the interest rate will be higher. You will usually be required to put forward a larger deposit (perhaps 15-30% of the property's value). The reason these differences are in place is that customers with bad credits are assessed as being higher risk by the lender.

How do I know if I have bad credit?

Many people don't know their credit rating or understand how it works. But it is actually the most crucial piece of information about you when applying for finance of any kind. There are a number of factors that have an impact on your credit rating. This is why you should never simply assume yours is in good shape simply because you've never been in debt.

Checking your credit report is essential to get an idea of how lenders will see your financial situation. There are many websites available to access credit reports. Armed with your credit score, you have a better idea of the types of mortgages you can apply for, regardless of how good/bad your credit rating is. If you have the time, it's worthwhile taking measures to improve your credit rating before you start your mortgage applications. This will maximise your chances of getting the best rate available.

How much can I borrow with bad credit?

If you are able to get approval for your mortgage application, the amount you can borrow will depend largely on your unique circumstances. This is assessed by looking at your income, and that of your partner, and calculating how much you will be able to afford per month.

Mortgage lenders often take other considerations into account. This can include things like your financial commitments and your monthly outgoings. A wide range of factors will be taken into account before the lender can decide whether to approve your application and give you a figure for how much you can borrow.

Applying for a mortgage with bad credit

Before you actually submit an application, it's wise to compare different mortgage deals to find what will work best for you. If you aren't comparing, you don't know whether the deal you're looking at is the best available.

When searching the market of mortgage products, it's best not to submit lots of applications simultaneously. Every time you make an application, it will leave a mark on your credit history that can be seen by other lenders. If you're making a lot of applications, it will look like you're having difficulty getting approval from a lender. This can actually reduce your chances of getting approved by anyone.

Think Plutus mortgage broker

Can I get a mortgage with bad credit?

Get Think Plutus in your corner - Our team of specialist mortgage brokers have a wealth of experience in the industry and whole-of-market access. This means we can search through 10,000+ mortgage products from 100+ lenders, many of which are not available to the general public. When you have bad credit, you need real experts in your corner who can zero in on the best options and support you throughout the application process. We have a strong record of helping people with bad credit secure a mortgage, and we would like to add you to that list. When you need a mortgage but you're hampered by bad credit, Think Plutus, and get in touch.

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