How can I get a mortgage with bad credit?

Getting a bad credit mortgage may be easier than you think. Don’t be disheartened if you have been turned away by high-street banks & lenders. We specialise in mortgages for those with a poor credit history. It is understandable to feel frustrated and disappointed when you are told you cannot get a mortgage. For many, this is a complicated and stressful process. Money troubles in the past can make it difficult to get approved for a loan from high street lenders.

The popularity of “bad credit mortgages” has grown significantly over the last 3-4 years. Many people realise that having blemishes on their credit history does not have to stop them from obtaining a mortgage. But where do you start?

We have prepared this guide from our expert advisors. Here, we look to give you the information you need to help make your mortgage a reality.

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Author: Carl Shave - CEO and co-founder
Last updated: 05 Mar 2024

I have been declined a mortgage, what can I do?

A lender may decline your mortgage application if they are not satisfied with your credit file. Whether in their eyes this is because:

  • there is not sufficient proof for them to say you will pay back the mortgage on time,
  • there are too many inconsistencies with your address history,
  • excessive credit accounts open, or
  • a whole host of other things.

Regardless of the reason, the effect is equally as frustrating.

By checking your credit history yourself you’re taking the first steps in ensuring it is accurate and up-to-date. In some cases, it may even be that certain parts of your credit history are incorrect. If you have the opportunity, look to set the record straight. It could assist in getting the mortgage you are looking for.

Our bad credit mortgage calculator can give an indication of how likely it will be for you to get a mortgage.

Bad Credit Topics

Whether it be late payments, defaults or CCJs, we’re here to help you secure a mortgage.

Useful Information

Bad credit myths

There are many different myths around your credit rating itself and the impact it will have on you when looking for a mortgage.

Here are some of the more common ones we hear, which are false:

  • Addresses can be ‘blacklisted’ by credit agencies. A previous resident’s financial record cannot impact your own.
  • Payday loans can boost your credit rating. Far from it! All this does is show lenders that you are not as good at managing your money.
  • People with similar names may impact your credit report. Not true. Unless someone is fraudulently using your name this will not impact you. Fraudulent use of your name is a criminal offence which you need to report immediately.
  • Checking your credit rating hurts your score. This is not true if you do it in the right way. Credit rating services will not impact you, neither will anything which uses a ‘soft’ search. If you repeatedly request credit, this is different and could affect you.
  • Credit report is linked to earnings. Whilst earnings may be linked to your financial habits, how much you earn is not used by credit agencies. Paying bills on time is better for your rating than having more money and failing to keep up your payments.
  • Getting married merges credit reports. Having joint accounts can affect your credit rating. However, any credit history you have before marriage will remain yours after marriage.
  • You have to wait seven years for a better credit report. This is half-right. Only because of certain ‘black marks’ on your credit history.

Things such as CCJs, IVAs, Defaults etc can take up to six years to be removed. But you do not need to wait for this to happen before you can apply for a mortgage.

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What should you do if you have bad credit?

Below we provide some top tips of things you can do if you have bad credit.

There are many different elements to ensuring your credit history is correct, but they can be split into the following areas:

  • Ensure your address history is correct – you do not want to have inconsistent or wrong history.
  • Check that there is no record of fraudulent activity.
  • Make sure that all outstanding/closed balances are accurate.

If you find any errors, contact the relevant credit agency. This will ensure the mistake is corrected. Whether it is the address, closing balance or anything else, contact them directly to ensure the details are changed.

A key thing to remember is whilst you are taking part in the process, avoid numerous hard credit checks. These take place when you apply for any kind of credit agreement.

These can include utilities, mobile phone contracts, store cards etc. This is critical. Especially if you believe your credit rating has been less than great in the past, it can worsen the situation.

Stay organised with your credit accounts. Make sure you keep track of any accounts that have been paid off or are no longer necessary. It is worth closing any of these open credit facility accounts.

There is nothing wrong with having and using credit if it is done manageably. In fact this enables you to demonstrate that you are capable of paying back financial commitments.

Having no credit history can be just as damaging to getting a mortgage as having credit issues. In fact, this is true even if you have never had credit in the past.

Closing accounts you no longer use will assist in reducing your level of available credit. It can demonstrate a level of discipline to lenders which they like to see. Having immediate access to existing credit even when not in active use could be enough to deter some potential lenders.

Registering to vote helps lenders and credit agencies verify your identity. It also helps with fraud scoring, which is part of the application process.

If you cannot register to vote, an alternative is to prove your eligibility to live in the UK. You can send this to the main three credit agencies and this can help you get the credit you need. The application process may be complicated. To understand what this means for you, it is best to talk to one of our advisors.

Don’t wait for elections – local or national – to register. Find your National Insurance number and start now. You can do this on the Government’s website.

It is very important to keep up with your monthly commitments. Make sure that you pay them on time, regardless of what they are. For some this may seem obvious, but this can even extend beyond paying the minimum payments every month too.

MoneyHelper has a free budget planner that can help you to budget.

If you are late on payments it is safe to assume this will make your chances of being successful more difficult.

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Bad Credit Mortgage FAQs

If you have damaged your credit history you need to prove the ability to repair it again. A credit building card is a tool that can be used to repair your credit score by providing evidence of responsibility.

How can a credit builder card help?

Usually a credit builder card provider is more likely to accept your application. Even if you have been declined for other cards. However, this comes with a lower credit limit and the cost of borrowing (the interest rate) is often more. This does mean you have to be careful and do the following:

  • Always pay back what you spend each month – on time. Remember a higher interest rate means that borrowing can cost you more. Plus, if you are unable to prove you can pay back regularly you are going to cause more harm.
  • Stay within your credit limit and demonstrate you can live within your means.
  • Do not withdraw cash on your credit card as it can cost more and again, demonstrate poor money management.

If your application for a credit builder card is likely to be declined, do not continue applying. Multiple searches can make the situation worse.

Consider all of the above factors. If you responsibly borrow and repay for a few months, it will boost your chances of getting a mortgage. Just do not go down this road if you have any doubts you can afford to pay it off.

Saving more money may not be a desirable option. Especially if you have been saving hard or cannot afford to do so. Paying more money upfront will give you a better rate. You will also be able to borrow more.

A term you will become familiar with in this process is LTV (loan-to-value). This is the ratio of how much money you will have to borrow against the actual value of the property.

Deposit sizes:

Property Value 5% Deposit 10% Deposit 15% Deposit 25% Deposit
£150,000 £7500 £15,000 £22,500 £37,500
£200,000 £10,000 £20,000 £30,000 £50,000
£250,000 £12,500 £25,000 £37,500 £62,500

Loan sizes:

Property Value 95% LTV 90% LTV 85% LTV 75% LTV
£150,000 £142,500 £135,000 £127,000 £112,500
£200,000 £190,000 £180,000 £170,000 £150,000
£250,000 £237,500 £225,000 £212,500 £187,500

Generally, the lower your loan-to-value ratio, the more mortgage options you can choose from. You will also get better interest rates. The amount of money you borrow in relation to the property value determines your level of risk. The higher the risk, the more money you need to borrow.

It is possible to get a mortgage even if you only have 5–10% of the property’s value as a deposit. This is known as a 90-95% loan-to-value ratio.

Some lenders may even consider a 100% mortgage under certain circumstances. The greater deposit you have, the better, but it does not need to limit your options.

Most important of all is: if you as a borrower are matched to the correct lender. Doing this yourself can be difficult at the best of times. But if you are looking for a mortgage with bad credit this can be even more difficult.

A broker who specialises in mortgages can easily find the best lender. They have the expertise to make the best decision. They may also often have access to exclusive rates or mortgages that others may not.

An additional benefit behind working with a broker is that they can generally make the application process easier. They can usually remove a lot of the stress associated in making the arrangements.

We at Just Mortgage Brokers have extensive experience in finding bad credit mortgages.

If you are looking for a mortgage, have been turned down elsewhere or are concerned that you may have bad credit get in touch today.

How to get a mortgage with bad credit: Key takeaways

  • Check your credit file is correct
  • Have any relevant documentation to hand.
  • Check you are on the electoral register.
  • Put down the biggest deposit possible for a purchase.
  •  Don’t carry out multiple credit or mortgage application searches.
  • Try to demonstrate your ability to repay credit following the bad credit issues.
  • Use a specialist mortgage broker.

Why choose Just Mortgage Brokers for your Bad Credit Mortgage?

  • This is our speciality – it’s what we do
  • Direct access to lenders underwriters enabling us to discuss your situation in detail
  • Exclusive deals available
  • Broker only bad credit lenders available to us giving you greater choice
  • Unlimited mortgage broker – giving a wide range of lenders at our disposal
  • Great customer reviews

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