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Can I get a mortgage if I am struggling with bad credit?


You may be in a position where you have faced barriers while applying for a mortgage as you have a history of bad credit. If you have hit a wall with certain lenders, there are some steps you can take next, and there are even some lenders who are prepared to help those struggling to get accepted.

Check your credit score

If you were unaware that you had a history of bad credit, it is important to check your credit score has no mistakes. If you think you have a good credit history and are confused as to why you would have been denied credit, it is always best to check to see if there has been a mistake on your credit file. The three credit file agencies: Experian, Equifax and CallCredit, that will provide you with a statutory credit report, which costs £2. They also offer 30 day free trials for their pay monthly service, so you could sign up, check your file and cancel straight away.
If there has been a mistake, we recommend that you contact the credit report company and the creditor immediately and request for your file to be updated. Once this has been completed, you can reapply again.

Build it back up

If you check your credit score and it has suffered, be that from bad credit or from lack of credit, you will need to work on building it back up to a good level (this is important to do even if you decide not to reapply for a mortgage).
You can improve your credit score in a number of ways:
• Get your name on the electoral register- you will find it much easier to get credit if your name is on the electoral register

• Cancel any unused credit cards- If you have credit cards open but unused this can have a negative effect on your credit file

• Stop applying for credit- continuing to apply for credit will show up on your credit file

• Arrange payment plans for any unpaid debt- If you have unpaid debt or have defaulted on your payments, try negotiating with your lender and offer to pay all or part of the outstanding debt and see if they will remove the default from your credit report.

What kind of mortgage can I get?

Even if you are unable to or do not have the time to improve your credit file before you apply for a mortgage, there are certain lenders who specialise in lending to people with bad credit. The mortgages they sell are often known as ‘sub-prime’ mortgages or ‘adverse credit’ mortgages.


Although these types of mortgages work the same as normal mortgages, they more than likely will require a much higher deposit. Some lenders offer mortgages for as little as a 5% deposit, but the average for a first time buyer is usually 20%. With a history of bad credit, you may be looking at deposits of 30% plus, as a lender is much more likely to take a chance on you if you have a higher deposit. So basically, get saving now.

Interest rates

You also have to be aware that with sub prime or adverse credit mortgages, you are much more likely to have to pay a higher interest rate. It may be better for you to work out if it would be cheaper for you in the long run to take time to build up your credit file, so eventually you are able to apply for a mortgage with a much cheaper interest rate.

Guarantor mortgages

There are a handful of lenders that offer guarantor mortgages. This is when a friend or relative can take on the role of either first name on the mortgage as a co-signatory or as a back stop should the first applicant fall behind with payments.
This may seem like a great idea, but an agreement like this can have serious implications for both parties as it may affect the guarantor’s ability to borrow in the future as well as their credit record should a payment be missed as they too are named on the mortgage.

If you are considering getting a mortgage but need more information, whether you have bad credit or not, contact our financial advisers today. You can get in touch by asking a question online, calling us on 0800 092 1245, or by arranging a visit.

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