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By Pete Mugleston | Mortgage Advisor

Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 3rd September 2020*

Let’s start by getting the bad news about guaranteed approval for bad credit mortgages out of the way first, because guarantees don’t exist in the world of mortgage lending.

Even someone with squeaky-clean credit doesn’t have the luxury of guarantees when it comes to getting a mortgage loan. Even if you’ve got your mortgage approval in principle (AIP), things can still go wrong and the lender can change their mind if they don’t like something when making further checks.

With all that said, having a history of adverse credit on your file doesn’t automatically mean you can’t get approved for a mortgage loan. In fact, there are specialist lenders who will measure your eligibility for lending fairly and, depending on your circumstances, you could even qualify for ‘standard’ interest rates.

Because getting approval for a bad credit mortgage, while possible, will take time and planning, this article explains how mortgage lender criteria influences your eligibility for a mortgage and how you can position yourself for the best chance of securing a mortgage.

Read on for the full low-down or click a link to jump ahead:

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Can I get approval for a mortgage loan if I have bad credit?

Yes, depending on your circumstances, it may be possible to get mortgage approval from a specialist lender.

This will come down to the following factors:

  • How long ago your bad credit events took place; the older your adverse credit, the better
  • Whether the issue is now resolved and how long they have been resolved for
  • How severe your bad credit issues are; a couple of missed phone bill payments are deemed less serious than bankruptcy or defaults
  • The deposit you have available; size matters because the larger your deposit, the smaller the risk you pose to the lender
  • Your current level of income; if you have a reliable income stream and you can prove you can afford the mortgage repayments, this will help a lender approve your application

How to get approval

To stand the strongest chance of getting a mortgage when you have bad credit on your file, take a systematic approach. If you’re applying for a mortgage when you have bad credit it’s good practice to find out if you’re likely to be accepted before making your application.

Every lender you apply to will do a credit check and, if your application is rejected, this will show up on your report for other lenders to see. By being cautious about which lender to apply to, you can save yourself a whole heap of hassle and heartache. And, more importantly, save your credit file from further unnecessary damage.

To increase your chances of getting approved for a mortgage when you have bad credit, your best bet is to seek advice from a specialist bad credit broker, like those we work with. Taking a holistic view of your bad credit and your current circumstances, they will work to match you with a lender who is best positioned to approve your application.

Get in touch for a free, no-obligation chat and we’ll connect you with a broker who can help you get the ball rolling in the right direction.

Get your credit rating

Can I get pre-approval?

When you have bad credit, getting pre-approval for a mortgage is relatively unlikely. Pre-approval for a mortgage means a lender has confidence in your application. This will likely require you to have the right level of deposit and an income which easily covers your mortgage repayments.

While it’s unlikely that you’ll easily find a lender willing or able to give you pre-approval, when applying for a mortgage with bad credit on your file, there are things you can do to help you stand a better chance of success…

How to get pre-approval

While mortgage pre-approval with bad credit on your file is unlikely, there are practical things you can do to help improve your chances of getting mortgage approval, including:

  1. Save a larger deposit; a deposit of between 20-30% will mean you’ll have more lenders who might be willing to consider your application.
  2. Ask your family to help; if you’re struggling to save for a deposit, many lenders will accept a gifted deposit from a close family relative. The money must be truly a gift and not a loan.
  3. Use a guarantor; if you can find someone willing to stand as a guarantor, this may be a good option for you. It’s a decision not to be taken lightly as you and your guarantor will end up being financially tied to one another which could impact both your credit ratings. Your guarantor will need to hold equity in a property and be willing to accept a charge being placed upon it. If you defaulted on your mortgage payments, your guarantor may be liable.
  4. Get your finances sorted; sometimes it’s wiser to bide your time. Postponing buying a home of your own may be more sensible, allowing you time to save for a better deposit and rebuild your credit rating, therefore making yourself a more attractive proposition to more lenders. Playing the slow game could lead to a more competitive interest rate at a later date.
  5. Apply through a specialist broker; as we have already touched on, a broker who is expert at helping customers with bad credit will be able to assess all your circumstances and advise you about which lenders you might be able to consider applying to based on your finances, the property you want to buy and the kind of mortgage you need.

Can I get approval for a bad credit mortgage online?

Yes, depending on your circumstances, with the right strategy and approach it can be possible. Most mortgage providers and brokers work online and will accept applications and support documentation via email or secure online portals. These days it is fairly common practice for a borrower to never actually come face-to-face with a lender representative or their mortgage broker.

Most of the specialist experts we work with have the capability to do all their work online and over the phone, get in touch for a chat. There’s no obligation to act on their advice and we don’t charge a penny for this service.

How easy is it to get mortgage approval with bad credit?

How easy you find it to get mortgage approval with bad credit on your file will come down to the type of bad credit on your record and how long ago the issue occurred.

If, for instance, you have a bankruptcy on your file, you won’t even be able to apply for a mortgage until it has been discharged. Most lenders will want to see a three to four year period of good financial conduct and an otherwise clean credit history during the intervening years before they will consider lending.

While you may be able to find a lender willing to lend to you if you’ve had a property repossessed in the last three years, rates you’ll be charged will almost certainly be high.

As a general rule, if you have a history of bad credit, the longer you have maintained good financial conduct without other problems, the more likely it is you’ll get your mortgage application approved.

A ‘rough-guide’ eligibility checker

As we’ve explained, getting approval for a mortgage when you have bad credit will depend on various circumstances and your current financial situation. However, if you meet all other eligibility and affordability criteria for a lender, the following should help provide you with a rough idea of how easy you might find it to get your application approved.

The table below gives you a rough guide to the likelihood of getting mortgage approval based on different types of bad credit and how long ago they occurred.

0-12 Months1-2 Years Ago2-3 Years Ago3-4 Years Ago4+ Years Ago
Late PaymentsYes (any number)Yes (any number)Yes (any number)Yes (any number)Yes (any number)
Mortgage ArrearsYes (Usually max 3 late)Yes (any number)Yes (any number)Yes (any number)Yes (any number)
CCJsMaybe (with good LTV)Maybe (with good LTV)YesYesYes
DefaultsMaybe (if good LTV)Maybe (if good LTV)Maybe (if good LTV)YesYes
Debt Management PlanUnlikelyYes (if credit report is unaffected)Yes (if credit report is unaffected)Yes (if credit report is unaffected)Yes (if credit report is unaffected)
IVAUnlikelyPossible with a 25% depositPossible with a 20% depositPossible with a 20% depositPossible with a 10% deposit
BankruptcyUnlikelyPossible with a 25% depositPossible with a 15% depositPossible with a 5% depositPossible with a 5% deposit
RepossessionUnlikelyPossible with a 25% depositPossible with a 25% depositYesYes

While the above data is correct at time of writing, it only provides a rough example of what you might be able to expect.

To get accurate, bespoke information relating to your credit issue and other financial circumstances, make an enquiry and speak to one of the expert mortgage brokers we work with.

Speak to a bad credit specialist

All the advisors we work with are whole-of-market mortgage brokers. They can save you time, money and potential marks on your credit report.

Call 0808 189 2301 or make an enquiry for a free, no-obligation chat and we’ll match you with a broker experienced in helping other customers in similar circumstances.

They will give you bespoke advice every step of the way to find the right deal for you by searching the entire market and narrowing down the deals that you qualify for based on your specific needs and financial situation.

Updated: 3rd September 2020
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FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.