First Time Buyer Mortgage Bad Credit History
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First Time Buyer Mortgage Bad Credit History
Charlie Connolly is here to explain how the mortgage process works if you are a First Time Buyer with a bad credit history.
Can you buy a house with bad credit as a First Time Buyer?
Yes, you can purchase a property with bad credit. However, you’re likely to have fewer options. It may also mean you have to save for a larger deposit.
Some challenges are the potential for higher interest rates, a smaller lender choice and stricter requirements, such as longer employment history or more evidence of income.
It’s worth obtaining a copy of your credit file for the initial appointment. Your mortgage advisor will then be able to identify what the bad credit is and speak to lenders who may be able to consider it.
Can I get a mortgage as a First Time Buyer if I have a CCJ, an IVA, a default, a bankruptcy or if I have payday loans?
Ultimately, it does depend on a number of things and can vary from lender to lender. High street banks are very unlikely to offer a mortgage to anyone who has recently had a county court judgement (CCJ), Individual Voluntary Arrangement (IVA), a default or bankruptcy – it can even be difficult after these have been cleared.
However, there are several adverse mortgage lenders in the UK who will provide mortgages to those with CCJs, defaults, IVA, past bankruptcies and payday loans.
For example, if you’ve been previously bankrupt, lenders are going to want to see that you’ve been discharged for a minimum of three years. If you’ve previously had a CCJ or default, ultimately this can depend on the size, how long ago it was and whether you have paid it back.
If you have had an IVA, most lenders like it to have been registered over six years ago. Some lenders require it to have been satisfied for three years before they can consider you.
If you’ve had a history of payday loans, some lenders may be able to accept this. However, they will likely want an explanation as to why you took the payday loan and approval will be subject to credit scoring.
Ultimately, it’s right to speak to your mortgage advisor. Most situations are judged on a case-by-case basis. If you have a combination of what we’ve just spoken about, speak to your mortgage advisor.
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Do First Time Buyers need a credit score? Can I get a mortgage if my credit score is very poor?
Yes, there are lenders out there who don’t credit score. If your score is poor, but you don’t have any defaults, CCJs, IVAs, payday loans etc., there could be a lender out there for you.
What is the right home loan for a First Time Buyer with bad credit?
This depends on your objectives and circumstances. Your mortgage broker will complete a fact find and recommend the right type of mortgage based on your objectives and circumstances. It’s really hard to say until we’ve met a client.
How much deposit will I need and how much can I borrow if I have bad credit?
Obtaining a mortgage with bad credit can be difficult at times, which might mean you need to increase your deposit. Most adverse mortgage lenders would need a minimum of 15% deposit available.
What’s the process of applying for a mortgage with bad credit as a First Time Buyer?
The process of applying for a mortgage with bad credit doesn’t change. You will need to give your credit file to your mortgage broker from the outset. This will help them identify the bad credit and assist them in finding the most appropriate lender based on your credit circumstances.
What steps can I take to improve my chances of getting a mortgage with bad credit as a First Time Buyer?
You can potentially help your credit score by making sure you’re on the voter’s roll and ensuring that your documents reflect your existing address. Check your bank statements, the voter’s roll and your driving licence – that can all help with your credit score.
If you’ve got bad credit, try to make sure it’s all paid up. If you’ve got a default, for example, but it’s been paid off and satisfied, this will then boost your credit score. It also shows the lenders that you’re now able to manage your finances in a better way.
How can a mortgage broker help here?
If you have bad credit, a mortgage broker can add serious value to the process for you. We can find a lender for you based on our previous experiences. We’ll guide you in the right direction to help you improve your credit file for future mortgages, as well.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
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