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Getting a Joint Mortgage When One Applicant Has Bad Credit

With adverse credit, getting the right advice is essential. Let an expert broker access more options and make your joint mortgage possible

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 27, 2021

Getting a joint mortgage can be difficult if you or the person you’re applying with has bad credit. Some mortgage lenders will approach your application with caution while others might decline it outright. But getting a good deal is possible under these circumstances!

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Will having bad credit affect a joint mortgage application?

Yes. It can make things less straightforward as some mortgage lenders will decline your application or offer unfavourable rates, but keep in mind that it’s still possible to find a good deal on a joint mortgage when one of the applicants has bad credit.

With the right advice and the help and knowledge of the bad credit mortgage brokers that work with us, it may be possible to find a specialist lender that considers husband and wife credit scores and looks at the overall strength of the application.

Many of these mortgage providers also have the flexibility to take the age, severity and reason for the credit problem into account when making their lending decision.

If you’re applying for a joint mortgage and either you or your partner has bad credit, it’s vitally important to get the right advice.

Being paired with the best possible lender for your needs and circumstances could be the difference between getting a favourable deal and ending up paying higher rates than necessary.

We won’t charge a fee and there’s no obligation to act on the advice you’re given.

Mortgage Lenders for Joint mortgage one with bad credit

Showing a range of the latest UK mortgages from lenders considering applications where one or more applicants have bad credit. Updated as of August 2021

Mortgage amount £150,000, over 30 years

28

Lenders

Mortgage Lender #1

£576

Monthly payment

95%

Maximum LTV

3.05% 3 year discounted

Initial rate

£199

Product fees

4.9% APRC

Overall cost for comparison

Mortgage Lender #2

£664

Monthly payment

95%

Maximum LTV

3.39% lifetime discounted

Initial rate

£0

Product fees

3.5% APRC

Overall cost for comparison

Mortgage Lender #3

£636

Monthly payment

90%

Maximum LTV

3.05% 3 year discounted

Initial rate

£199

Product fees

4.9% APRC

Overall cost for comparison

Mortgage Lender #4

£685

Monthly payment

90%

Maximum LTV

3.64% 5 year fixed

Initial rate

£774

Product fees

4.2% APRC

Overall cost for comparison

Mortgage Lender #5

£504

Monthly payment

75%

Maximum LTV

1.31% 2 year fixed

Initial rate

£995

Product fees

3.3% APRC

Overall cost for comparison

Mortgage Lender #6

£879

Monthly payment

75%

Maximum LTV

5.79% 2 year fixed

Initial rate

£0

Product fees

4.9% APRC

Overall cost for comparison

What types of bad credit can affect a joint mortgage?

The following credit issues are likely to impact a joint mortgage application…

In the eyes of most lenders, a mortgage application is only as strong as the least creditworthy applicant named on the deeds. So if both you and your partner are going on the mortgage and one of you has any of the above issues, some lenders might decline you outright, while a specialist bad credit lender might request more detailed information before deciding whether to offer you a mortgage.

This may include…

  • What is the exact nature of the credit issue?
  • What type of account/debt the issue was relating to (loan, card, mortgage etc)
  • Why did it occur and was it a one-off?
  • How long ago did it happen?
  • How much was the debt for?
  • Whether or not the debt has been repaid or a repayment plan is in place.

Alongside this, most mortgage lenders will want to know certain things before a decision to lend can be made.

This would normally include:

The presence of bad credit on a joint mortgage application can increase the chances of rejection or being lumbered with unfavourable rates, but a specialist bad credit lender can level the playing field by matching you with a lender who is most likely to approve a mortgage under these circumstances.

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Getting a joint mortgage when both applicants have bad credit

If you’re applying for a joint mortgage and both applicants have bad credit records the lender will want to make a full assessment of the individual’s circumstances. Here they will look at the ‘worst case scenario’ when making a decision to lend but will add up all adverse credit events for the case to ensure that as a whole, it meets their policy.

For example, if applicant one has had some late payments and applicant two has had a CCJ registered against them, then the lender will assess the case and apply their underwriting criteria based on BOTH of the adverse credit events on the case. If they accept the CCJ but not the late payments as they were too recent, then the case would be declined.

One of the first things lenders will check is both of your credit scores through a credit search.

We explain these in more detail:

Credit score

A credit score is the score which the main credit reference agencies assign to your credit report based on your financial conduct. This will help a lender to assess whether you are considered a ‘good risk’ or not and that you will be able to repay what you borrowed.

There is a difference between credit score and credit search. To determine an applicant’s credit score they will look at your credit report and will add points for each piece of information included in it.

They will then calculate the overall points total to give you a credit score. If the score fits with their lending criteria, then a decision to lend is made. There is no universal score and decisions vary from lender to lender so it’s worth speaking to a specialist broker who can guide you through the process and gain the best options for you.

Credit search

Sometimes known as a credit check this is where a lender will look at your credit report to find out about your credit history. There are typically two types of credit searches that lenders use. These are called ‘soft search’ and ‘hard search’.

A soft search is where the lender will carry out an initial check on your credit file but not see all of the report. The advantage of doing this is that it doesn’t record a search on your credit file and therefore won’t leave a negative impact. Only you can see the search if you obtain a copy of your credit file.

A hard credit check for a mortgage is a full search of your credit file and will be noted on your credit report. It will be visible to all parties including any lenders that you approach for credit and yourself. It can have a negative impact on your credit score if you were to make multiple applications for credit say over a short period of time.

Adding a partner who has bad credit to an existing mortgage

Generally, lenders are happy to consider an application to add a partner to an existing mortgage, this is typically considered a remortgage and also transfer of equity (into the joint names if this is the case). For this reason, the lender will request full information regarding the individuals’ circumstances, for example, credit history, employment status, age etc.

If there is a history of adverse credit it can make things a little more tricky, as your current lender might decline to add your partner to the mortgage.

To add someone to a mortgage there are usually additional costs involved, such as solicitors’ fees to conduct the transfer of equity into joint names, register the new partner at land registry and lender administration fees. In the case of a remortgage, there may also be a valuation, arrangement fees, other conveyancing costs and any redemption penalties from the existing lender to consider.

What happens to a joint mortgage if one of you goes bankrupt?

The first thing to note is that generally, secured debt is not included in bankruptcy proceedings unless the mortgage is in default. If you are still making payments to the mortgage, then this won’t usually be repossessed.

If one of you goes bankrupt on a joint mortgage, then the official receiver in charge of setting up the initial stages of the bankruptcy will conduct a review of your assets to determine your beneficial interest in the property. The equity is essentially assessed based on the person’s SHARE of the equity, which does not impact the other party on the mortgage, who’s share is safe from the bankruptcy.

However, the Official Receiver must force the bankrupt person to release the equity to settle some or all the debt. If this cannot be done by raising the funds, then a recommendation would be made to put the property up for sale.

If there is little/no equity then generally, it’s possible for someone to stay in their home. This may be restricted for 3 years, at which point the property is revalued and equity share assessed again to establish whether the property has increased in value.

Bankruptcy annulment

If there is sufficient equity, one option would be to explore raising capital against the property to pay off all the debt and effectively annul/undo/reverse the bankruptcy. There are some lenders that can consider this as a shorter-term loan that gets refinanced onto a normal mortgage after the bankruptcy is removed.

FAQs

Can we still get a mortgage if my partner has bad credit?

Yes. If you’re jointly buying a house and one spouse has bad credit, it would be treated as a joint mortgage application. The number of approachable lenders will be fewer if one of you has bad credit, but that isn’t to say getting a good deal is impossible.

Every mortgage provider has its own policy on what’s acceptable, both in terms of the credit issue in question and whether they would consider a mortgage application from just one of the two parties.

Whether your joint mortgage application is successful might ultimately come down to the age, severity and cause of the credit issue in question.

Most lenders will want both applicants to be named on the deed, and will judge the application based on the worst credit profile. This means that if one person has a good credit score but one has bad credit, the perfect credit record is often trumped by the poor credit.

However, it’s important to know the difference between “credit score” and “credit search”.

The majority of high-street lenders will perform a credit check for a joint mortgage and will score the mortgage application jointly, so borrowers must meet a joint credit score needed for the mortgage to be approved.

Some, however, don’t apply a combined credit score to a joint application. They will search the applicants’ credit history and look for issues that fall outside of their policy – if there are none then it will most likely be accepted, assuming the rest of the criteria is met.

Can I get a joint mortgage if my partner has no credit history?

Having no credit at all is at times damaging to an applicants’ credit score, as having never borrowed, lenders have no way of assessing payment conduct to establish whether they are a good borrower or not!

As mentioned above, some lenders will use “credit scoring” when considering a mortgage application, and others use a “credit search” model. Often when a borrower has no credit and fails a lenders’ “score” it’s useful to remember that lenders have no score to pass, so long as the details of their credit profile matches the lending policy. In the case of getting a mortgage where a partner has little or no credit it may be necessary to choose a lender that adopts a credit search approach.

Thankfully, the specialist mortgage brokers that work with us fully understand the different lenders underwriting criteria and are best placed to match you with the best lenders.

Can you leave a partner with bad credit off a joint mortgage?

Normally lenders will want all applicants living at the property to be on the mortgage application. However, if one of the applicants has a bad credit history some lenders will consider the other applicant who has a clean credit record in their own right subject to deposit and affordability criteria.

One thing that can make this more complex however, is the issue of deposit source. Generally, if a person is gifting a deposit then it is based on them having no interest in the property and not requesting the deposit back. This is of course hard to justify if they are then also living in the property, as it’s difficult to evidence a lack of interest in it if you have given cash for its purchase and live there at the same time!

Thankfully there are some lenders that are happy to consider a gifted deposit to a partner with a clean credit record, providing they are happy to sign the appropriate paperwork to waive rights to the property in event of repossession.

Can I get a joint mortgage with an IVA?

Yes, there are lenders who will consider the overall strength of a joint mortgage application if one applicant has an IVA, but your chances of approval and landing favourable rates will be significantly better if it’s an historic IVA on your file.

Most lenders will prefer the IVA to have been settled while others will only consider your application if it’s at least three years old. However, joint mortgage options could still be available if your IVA is more recent. Just keep in mind that you might need to put down extra deposit and seek professional advice to get a good mortgage deal.

Speak to an expert

If you’re applying for a joint mortgage and either you or your partner has bad credit, it’s vitally important to get the right advice.

Being paired with the best possible lender for your needs and circumstances could be the difference between getting a favourable deal and ending up paying higher rates than necessary.

Call us today on 0808 189 2301 or make an enquiry and we’ll introduce you to a bad credit mortgage broker who specialises in cases just like yours.

We won’t charge a fee and there’s no obligation to act on the advice you’re given.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of the 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 information 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.

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