It’s possible to get a mortgage with bad credit, although you’ll probably pay higher interest rates and you may need to come up with a larger deposit. There are mortgages designed for people with poor credit, and some lenders specialise in offering these. These are known as bad credit mortgages, adverse credit mortgages, or sub-prime mortgages. Remember, you should only get a mortgage if you can afford the monthly repayments. If you can’t keep up with them, you may lose
your home. You might think you have bad credit because you’ve been rejected for credit in the past. But remember, different lenders have different criteria for lending money – some lenders may see you more positively than others. So there’s no hard and fast rule of what’s considered bad
credit. However, there are certain factors on a credit report that would make most lenders think you’re a higher risk – like missing credit card payments, defaulting on a loan, and applying for credit too often. If you think you have bad credit, it’s a good idea to sign up for a
free Experian Account to get your Experian Credit Score – this will give you an idea of your credit situation and how lenders may view you. ‘Bad credit’ mortgages are just like regular
mortgages, except they’re likely to come with high interest rates and there could be a lower limit on how much you can borrow. You might also be asked to come up with a larger deposit of at least 20-25% of the value of the property, rather than 5-10%. This is because having a lower credit score can be viewed as a high risk by the lender. Usually, the higher your credit score, the better your chances are of getting approved and getting
lower interest rates. Use our calculator to find out how much can you borrow for a mortgage, how much you'll pay each month, and how much interest you'll pay in total: Your monthly repayments contribute to both repaying the money you've
borrowed, as well as paying interest charges. The total amount you repay is a combination of the mortgage debt and the interest charges accrued over the lifetime of the mortgage. Note that this mortgage calculator assumes your interest rate will remain the same for the full term of the mortgage, and you are on a capital repayment, rather than an interest only, mortgage. Can I get a mortgage with bad credit?When you apply for a mortgage, lenders will check your credit history to understand how well you manage your finances. They’ll also need to see your income, monthly outgoings and savings - what you earn and what you spend. This is to ensure you can afford the monthly repayments, especially if things change - like interest rates going up, or your income going down. It’s possible to get a mortgage with poor credit, but it helps to show yourself in the best possible light. That means taking care of your credit history and budgeting sensibly.
Remember, you’ll also need a decent deposit in place – at least 10-20% of the property price. Can I remortgage with bad credit?If you already have a mortgage and you want to remortgage or refinance with bad credit, the first step is to keep up to date with your monthly payments, to prove to the lender that you’re a responsible borrower. The lender will also want to see how your repayments impact your outgoings in general, and what percentage of your income it is. They may also look at how much of your home you’ve paid off so far. How your credit score can help you get a mortgageBefore you apply for a mortgage, you can get an idea of how lenders may see you by checking your credit score. It’s based on information in your Experian Credit Report, which is one of the factors lenders can use (along with other information you’ve given in your application) to decide whether to accept you or not. Lenders like to see someone who can make monthly repayments on time, and who can keep control of their overall debt. Successfully managing simple credit accounts like a credit card, a mobile phone contract and some household bills should help your credit score go up over a short period of time. Remember, not every lender uses the exact same factors, and they may score based on different factors. To help put yourself in a better position for lower interest rates and better mortgage conditions, see what you can do to improve your credit score. Compare mortgages with ExperianFeatured articlesMortgages and credit scoreRead Improve you credit scoreRead What is the lowest credit score to buy a house?Generally speaking, you'll need a credit score of at least 620 in order to secure a loan to buy a house. That's the minimum credit score requirement most lenders have for a conventional loan. With that said, it's still possible to get a loan with a lower credit score, including a score in the 500s.
Can I get a loan with a 500 credit score?You may qualify with a poor credit score as low as 500, but you must also satisfy several other requirements to get an FHA loan guarantee. These loans require a 10% down payment (or 3.5% if your credit score is above 580), mortgage insurance, and a monthly payment for the life of the loan.
What's the easiest loan to get with bad credit?The easiest loans to get approved for would probably be payday loans, car title loans, pawnshop loans, and personal installment loans. These are all short-term cash solutions for bad credit borrowers in need. Many of these options are designed to help borrowers who need fast cash in times of need.
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