Can I Get a Mortgage With Bad Credit?

Yes, it may be possible to get a mortgage with bad credit.

A missed payment, default or County Court Judgment does not automatically mean that every mortgage lender will decline you. However, your choice of lenders and mortgage products may be more limited, and the options available will depend on the details of your credit history and your wider circumstances.

Lenders may consider what happened, how recently it occurred, how much money was involved, whether the debt has been repaid and how you have managed your finances since.

Your income, monthly commitments, deposit and the property you want to buy will also form part of the assessment.

If you are searching for a bad credit mortgage broker in Swansea, this guide explains what lenders may consider and how preparing properly can help you understand your options.

What does bad credit mean when applying for a mortgage?

“Bad credit” is a broad term. It can describe anything from one isolated missed payment to a more serious history of financial difficulty.

Credit issues can include:

• Late or missed payments
• Defaults
• County Court Judgments, commonly known as CCJs
• Debt Management Plans
• Individual Voluntary Arrangements
• Bankruptcy or a Debt Relief Order
• Mortgage or secured-loan arrears
• Payday loans
• High levels of unsecured debt
• Several recent credit applications
• Little or no established credit history

These issues are not all treated in the same way. A single missed mobile-phone payment several years ago is very different from recent mortgage arrears or an ongoing debt arrangement.

This is why it is important to look at the complete credit report rather than relying only on the score shown by a credit-reference agency.

Is there a minimum credit score for a mortgage?

There is no single UK credit score that guarantees mortgage approval.

Credit-reference agencies use their own scoring systems, and lenders have separate internal assessment methods. A score described as good by one service does not automatically mean that every mortgage lender will accept the application.

Lenders can review the information held on your credit report, including your payment history, outstanding borrowing, financial associations and recent searches. They then apply their own criteria and credit-scoring system.

This means that two lenders could reach different decisions after reviewing the same person’s circumstances.

What will a mortgage lender consider?

When assessing a mortgage application involving adverse credit, a lender may consider several factors.

The type of credit issue

A lender may treat a missed payment, default, CCJ, Debt Management Plan or bankruptcy differently. Some lenders accept certain types of adverse credit but not others. The account involved can also matter. A missed payment on unsecured credit may be viewed differently from recent mortgage or secured-loan arrears.

When it happened

The age of the credit issue can be important. A recent missed payment may cause more concern than an isolated issue from several years ago, particularly when your finances have been well managed since. Defaults and CCJs usually remain visible on a credit file for six years from the relevant registration date. However, you should not assume that you must always wait until an entry disappears before asking for mortgage advice.

The amount involved

Lenders may consider how much money was involved. A small communications default can be treated differently from a large unpaid loan or substantial mortgage arrears. Some lenders apply limits to the number and value of adverse entries they will accept.

Whether it has been repaid

A lender may check whether a default or CCJ remains outstanding or has been satisfied. Repaying a debt does not usually remove an accurate entry from your credit report immediately, but it can update its status and may improve the lenders available to you. Do not use all your deposit savings to repay debts without first understanding whether doing so would improve your overall mortgage position.

The reason behind the problem

Context can sometimes help a lender understand what happened. Credit problems can arise following illness, redundancy, bereavement, relationship breakdown, business difficulties or an unexpected reduction in income. An explanation does not override lender criteria or guarantee approval, but it can help present an accurate picture of your circumstances and how they have changed.

Your financial conduct since

A lender may review how you have managed your commitments since the credit issue occurred. Making payments on time, avoiding further missed payments and keeping within agreed credit limits can help demonstrate that the previous problem was isolated rather than ongoing.

Your deposit

Your deposit affects the loan-to-value ratio, commonly shortened to LTV. Some mortgages available to applicants with adverse credit may require a larger deposit than a mainstream mortgage. However, the amount needed will depend on the credit issue, its age, the lender, the property and the rest of the application. A larger deposit can sometimes improve the options available, but it does not guarantee acceptance.

Your income and affordability

Having adverse credit does not remove the need to pass the lender’s affordability assessment.

The lender will consider your income alongside loans, credit cards, car finance, childcare, maintenance payments and other regular commitments.

You can learn more about this in our guide to how much you could borrow for a mortgage.

Can I get a mortgage with missed payments?

It may be possible to get a mortgage after missed payments.

The lender may consider:

• How many payments were missed
• How recently they occurred
• Whether they happened on one account or several accounts
• The type of account involved
• Whether the account is now up to date
• Whether further problems have occurred since

An isolated missed payment caused by an administrative error may be assessed differently from a repeated pattern showing ongoing financial pressure.

Can I get a mortgage with a default?

Some lenders consider mortgage applications where a default is recorded.

The options can depend on the default date, value, account type and whether it has been satisfied. A lender may also look at your credit conduct before and after the default.

Do not assume that every default must be removed before a mortgage is possible. Equally, do not submit several mortgage applications hoping that one lender will overlook it.

The default should be reviewed against the intended lender’s criteria before an application is made.

Can I get a mortgage with a CCJ?

A CCJ does not always prevent you from getting a mortgage.

Lenders that consider CCJs may apply limits relating to:

• The number of CCJs
• The total value
• How recently they were registered
• Whether they have been satisfied
• Your deposit

If a CCJ is paid in full within one month of the judgment, it may be possible to apply for it to be removed from the register. Otherwise, it can generally remain recorded for six years.

If you believe a CCJ has been recorded incorrectly, obtain appropriate guidance before applying for a mortgage.

What about a Debt Management Plan, IVA or bankruptcy?

A Debt Management Plan, IVA or previous bankruptcy can significantly reduce the number of lenders available, but it does not necessarily mean that home ownership will never be possible.

The lender may consider whether the arrangement is active or completed, when it began or ended, whether payments have been maintained and how your finances have been managed since.

These cases can be complex. The timing of an application and the intended lender’s criteria should be reviewed carefully before any credit search is carried out.

Will bad credit mean paying a higher interest rate?

It can.

Mortgages designed for applicants with adverse credit can carry higher interest rates or fees because the lender considers the application to present a greater risk.

The rate available will depend on the type and age of the credit issue, your deposit, affordability, property and market conditions at the time.

Do not look only at the headline interest rate. Product fees, early repayment charges, the mortgage term and the total cost should also be considered.

Can I get a joint mortgage if one applicant has bad credit?

It may still be possible to obtain a joint mortgage when only one applicant has adverse credit.

However, the lender will assess both applicants and will normally consider the weaker credit profile when deciding whether the application meets its criteria.

Applying in one person’s name is not always a straightforward solution. The lender may consider ownership, affordability, financial commitments and the relationship between the applicants.

Joint accounts and other shared credit can also create a financial association on your credit reports.

Should I apply directly to my bank?

Your bank can only assess you against its own lending criteria and mortgage products.

If your circumstances do not fit those criteria, the application could be declined even if another lender might take a different approach.

Before making an application, it can be helpful to speak to a mortgage broker who understands adverse-credit criteria and can research lenders suited to the specific issue showing on your report.

If you have already been declined, read our guide explaining what to do when your bank says no to your mortgage.

Why should I avoid making several mortgage applications?

Submitting multiple applications without understanding the lender’s criteria can create unnecessary hard credit searches.

A hard search is recorded on your credit report. Several searches over a short period could create further questions for the next lender and will not resolve the original reason for a decline.

A mortgage Agreement in Principle can also involve either a soft or hard search, depending on the lender.

Our guide to mortgage Agreements in Principle and credit searches explains the difference.

How can I prepare before applying?

Before applying for a mortgage, consider taking the following steps:

• Check your credit reports with all three main credit-reference agencies
• Review the complete reports rather than looking only at the scores
• Correct inaccurate personal information and address history
• Raise a dispute if information has been recorded incorrectly
• Make all current payments on time
• Avoid unnecessary new credit applications
• Register on the electoral roll at your current address if eligible
• Keep a clear record of your deposit
• Prepare an honest explanation for previous financial difficulties
• Speak to a mortgage adviser before submitting an application

You do not need to make your bank statements look artificially perfect. The priority is to manage your commitments responsibly and provide an honest picture of your finances.

Our guide explaining what mortgage lenders look for on bank statements may also help you prepare.

Should I wait before applying?

Sometimes waiting can improve the lenders, deposit requirements or products available. In other circumstances, suitable options may already exist.

The right answer depends on the precise dates shown on your credit report, the type of issue, your deposit, affordability and your plans.

An initial conversation can help you compare applying now with waiting. It does not commit you to proceeding with a mortgage application.

How can a bad credit mortgage broker help?

A mortgage broker can review the circumstances behind the credit issue and research lenders whose criteria may be appropriate.

This can include considering:

• The exact information shown on your credit reports
• The dates, amounts and status of adverse entries
• Your income and monthly commitments
• Your available deposit
• Mortgage affordability
• The property you want to purchase or remortgage
• Whether applying now or waiting could provide a better outcome

This research can reduce the risk of approaching unsuitable lenders and accumulating unnecessary credit searches.

How Cariad Mortgage Solutions can help

At Cariad Mortgage Solutions, we take a holistic and non-judgmental approach to mortgage advice. We put people before products.

Life does not always go according to plan. Illness, redundancy, relationship breakdown and unexpected changes in income can affect anybody’s finances. We will listen to what happened, review your current position and explain honestly what may be possible.

As a mortgage broker based in Swansea, we can research options from across the mortgage market rather than assessing you against the criteria of only one bank.

We can review your credit reports before recommending a lender, help you prepare the relevant documents and explain what the lender may need to know.

Our support also goes beyond arranging the mortgage. We can guide you during the house-hunting process, assist with presenting offers to estate agents, help you arrange solicitors and surveyors and communicate with the lender and the other professionals involved.

We remain by your side throughout the process, right through to completion and beyond. Even after you have collected the keys, we will continue to be a point of contact when you need us.

We are based in Swansea and support clients throughout South Wales and across the UK.

Mortgage Advice With Heart.

Ready to understand your options?

If you are looking for a bad credit mortgage broker in Swansea, you do not need to feel embarrassed or have everything worked out before asking for advice.

You can:

• Book an initial telephone consultation
• Contact our Swansea office
• Use the WhatsApp button on our website

We will listen without judgment, explain what may be realistic and help you understand the next step.

Frequently asked questions

Suggested reading

• Bad Credit Mortgage Advice in Swansea
• What Happens If My Bank Says No to My Mortgage?
• What Do Mortgage Lenders Look for on Bank Statements?
• Mortgage Agreement in Principle: What Is It and Does It Affect Your Credit Score?