How to get the best mortgage deal Bad credit mortgages

Woman with white paper points at laptop screen

It can be difficult to get a mortgage if you have a bad credit record

Since the credit crunch began it has become more difficult for people with a bad credit score to get a mortgage.

Before 2007, the sub-prime sector - ie. people with bad credit - was viewed as a lucrative area of the mortgage market for lenders, and these kind of loans were widely available.

But in recent years, lenders have become more risk averse and the market for bad credit mortgages is now more limited.

Can I get a bad credit mortgage?

Even with a poor credit history you may still be able to find a mortgage, but it will be more difficult than for someone with a better credit record. You can also expect to be charged higher than average interest and you will need to have a large deposit. 

To find out if, or how, you might be able to secure a mortgage if you have bad credit history we recommend you speak to a mortgage adviser. The independent experts at Which? Mortgage Advisers can offer advice tailored to your circumstances - call for a free consultation on 0808 252 7987. 

Lenders often restrict the amount they are willing to lend. This is usually around 80% of the value of the property, though some lenders will only offer mortgages up to 60% of the value of the property. 

Find out more: What a mortgage lender will lend you - a detailed explanation of how much you can borrow

Why would I have bad credit rating?

A number of things can affect your credit rating. Some of the main reasons include:

  • If you have missed credit card, loan or mortgage payments
  • If you are in some kind of debt repayment arrangement, e.g an IVA, or have been declared bankrupt
  • If you have County Court Judgements against you

If you think this may apply to you then you should request a copy of your credit report before applying for a mortgage. There are three agencies in the UK that hold this data: Experian, Equifax and Callcredit. 

Once you have your report you should consider what you can do to improve your credit rating, for example checking all the information on record about you is correct. You should also avoid making lots of different applications for credit including mortgages as this will show up on your record and may harm your rating further.

Find out more: How to improve your credit rating - get back on track with our tips 

More on this...

Your home may be repossessed if you do not keep up repayments on your mortgage.

Which? Limited (registered in England and Wales number 00677665) is an Introducer Appointed Representative of Which? Financial Services Limited (registered in England and Wales number 07239342). Which? Financial Services Limited is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited. Registered office: 2 Marylebone Road, London NW1 4DF.