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Help to Buy Bad Credit

See how expert advice could help secure your Help-To-Buy mortgage

No impact on credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Advisor, MD

Updated: August 20, 2021

Help to buy with bad credit

Many of the people we have helped have previously been told that their bad credit will prevent them from being able to get a Help to Buy mortgage. This is often incorrect and in many cases, getting a Help to Buy mortgage with bad credit may be possible, even if you have been turned down by other lenders.

In this guide, we have gathered all the key information you’ll need to know about Help to Buy and bad credit.

If you are looking for professional advice about how to get a Help to Buy mortgage with bad credit, speak to an advisor.

Do you need a good credit rating for a Help to Buy: ISA?

📢 *UPDATE: The Help to Buy ISA scheme closed to new applicants in 2019. You can find more information here 🏠

Not necessarily. For a Help to Buy: ISA, there are no credit checks or affordability criteria to be met as you are saving money as opposed to borrowing it, so any bad credit you have will not affect your likelihood of being able to open a Help to Buy: ISA.

To qualify for a Help to Buy: ISA, you must:

  • Be aged 16 years or over
  • Be a UK resident
  • Be a first time buyer
  • Not have another active cash ISA in the same tax year

Can you get a Help to Buy Equity Loan to buy a house with bad credit?

📢 *UPDATE: The Help to Buy equity scheme entered its third phase in April 2021 and is now exclusive to first-time buyers. You can read more in our complete Help to Buy mortgage guide. 🏠

Bad credit can affect your chances of approval for a Help to Buy mortgage and your lender will want to assess your credit history as well as your affordability when deciding if they can approve your application. That being said, the credit checks are applicable to your mortgage and not for the government Help to Buy: Equity loan itself.

To qualify for a Help to Buy: Equity loan, you must:

  • Be aged 16 years or over
  • Be a UK resident
  • Be a first time buyer

Can you have a Help to Buy: ISA and then apply for a Help to Buy: Equity loan?

Yes. If you meet the eligibility criteria for both schemes, then it is possible to use your Help to Buy: ISA to save for a deposit and then apply for a Help to Buy: Equity Loan for the rest of your deposit.

Are there Help to Buy mortgage lenders that accept bad credit?

Yes. There are specialist lenders who are more willing to lend to approve a mortgage for borrowers with adverse credit, as well as those who are self employed or have more complex income.

Although the Help to Buy: Equity Loan scheme excludes ‘credit impaired customers’, borrowers with less severe bad credit may be able to obtain a mortgage under the Help To Buy scheme.

If you have bad credit this could include:

  • Low credit score
  • Late payments
  • Mortgage arrears
  • Defaults
  • CCJs
  • Debt management plans
  • IVA
  • Bankruptcy
  • Repossession

For more information on how to get a Help to Buy poor credit mortgage or for more information about the Help to Buy scheme and how bad credit can affect your application, contact a bad credit mortgage specialist.

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Can you get a Help to Buy mortgage after bankruptcy?

Bankruptcy is a very severe form of credit to have on your report and most lenders have policies that prevent them from lending to customers with this. However, some lenders are happy to provide a Help to Buy mortgage for customers who have been bankrupt, once they deem them eligible.

The point at which you’ll become eligible really differs lender to lender though. A few are happy to offer you a Help to Buy bad credit mortgage as soon as you have been discharged but this can often come with unfavourable conditions including a large deposit and a high interest rate.

Because of this, it’s best to speak to one of the mortgage advisors we work with who has experience in Help to Buy mortgages for people with bad credit. As well as being able to offer you a free Help to Buy credit score, they’ll also be able to search the market and put you in touch with lenders who are more likely to accept you.

Talk to an advisor for more information and advice on this.

How does bad credit affect how much you can borrow on a Help to Buy mortgage?

Adverse credit may affect your maximum affordability because lenders will see a history of missed payments or other forms of bad credit as a risk.

Usually most lenders cap their loans at 3-4x your income, although some lenders may consider loaning 5x your income, in the right circumstances. For someone with bad credit, most lenders are likely to cap the loan at smaller multiples of your income so your monthly mortgage repayments are lower and therefore easier to keep up with.

See below for an example of how income multiples can affect the amount you borrow and your monthly repayments on your mortgage:

Income Multiples Loan Amount Monthly payments (mortgage term of 25 years)
x 3 £75,000 £356 (40%)
x4 £100,000 £474
x5 £125,000 £593

Can you remortgage a Help to Buy if you have bad credit?

Yes, but you might want to speak to a mortgage broker first. If you’ve had credit problems since you took out your original Help to Buy mortgage, this might affect your eligibility and the rates on offer when the time comes to remortgage.

The good news, though, is that we work with expert mortgage brokers who help customers with bad credit refinance every day. Read our guide to Help to Buy remortgages to find out how to get the best deal.

Why you should speak to an advisor about Help to Buy mortgages and bad credit

A mortgage advisor’s advice is invaluable, especially if you have bad credit and need advice on which lenders to turn to for the best chance of approval for a Help to Buy mortgage.

A lot of mainstream lenders lack the specialist knowledge needed to properly assess your Help to Buy mortgage application and often they turn bad credit borrowers away because they don’t know the lenders to refer them to.

We’ve helped over 120,000 people find the right mortgage, even those who have been previously declined or have bad credit. In fact, our customers consistently rate us 5 stars on Feefo, mainly because of our outstanding service, but also because we  only work with qualified advisors who are:

  • Whole of market brokers
  • OMA Accredited
  • Qualified after completing a 12 module LIBF accredited training course

Contact an expert about Help to Buy with bad credit

If you have questions about the Help to Buy scheme bad credit and want to speak to an expert for the right advice, call Online Mortgage Advisor today on 0808 189 2301 or make an enquiry.

Then sit back and let us do all the hard work in finding the broker with the right expertise for your circumstances.  We don’t charge a fee and there’s absolutely no obligation or marks on your credit rating.

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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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