How to get the best mortgage deal Bad credit mortgages

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Some lenders specialise in providing mortgages to people with a bad credit rating

Getting a mortgage when you've got a bad credit rating is tough, but not impossible. We explain what options are available and what you can do to improve your prospects.

How have bad credit mortgages changed?

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

Before 2007, the sub-prime sector - ie the part of the mortgage market aimed at people with bad credit - was viewed as a great money-maker for lenders, and these kind of loans were widely available.

However, in recent years lenders have become more risk averse, and the market for bad credit mortgages has become more limited.  

Nevertheless, there are still some lenders in the UK that specialise in offering mortgages to borrowers with a poor credit history. 

  • If you're struggling with mortgages because of a poor credit rating, we'd recommend talking to a whole-of-market, impartial broker such as Which? Mortgage Advisers. The friendly team can assess your situation and explain which mortgages you're most likely to get accepted for. Call for a free consultation on 0808 252 7987. 

Can I get a mortgage with bad credit?

If you have a bad credit history, you may still be able to find a mortgage using specialist lenders, but getting accepted will be harder for you than it is for people with better credit records.

You'll have to pay higher-than-average interest and will need to have a large deposit. This is because bad credit mortgage lenders often restrict the amount they are willing to lend.

A mortgage for someone with poor credit will usually be capped at 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

Why do I have a 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, eg an IVA, or have been declared bankrupt
  • if you have County Court Judgments against you
  • if you have never taken out any credit and so haven't built up a record of paying things back in time.

Whether or not you think these factors apply to you, you should always check out your credit report before applying for a mortgage. The three biggest organisations for this are Callcredit, Equifax and Experian. If you're concerned, it's worth checking how you fare with all three companies, as they all score slightly differently.

Once you have your report(s), consider what you can do to improve your credit rating, and check that all the information on record about you is correct. Avoid making lots of different applications for credit, including mortgages, as this will show up on your record and may harm your rating further.

In some cases, it will be better to wait until your credit history has improved so you can access more affordable mortgage deals. A good mortgage adviser will be able to ascertain what mortgage deals you are likely to be accepted for and advise whether you're better off waiting.

Find out more: how to improve your credit rating

Remortgaging with a bad credit mortgage

Making your monthly mortgage repayments on time will help you build a stronger credit history (assuming all other debt is also paid back on time). 

It may therefore eventually be possible to remortgage to secure a better rate from a traditional lender.

Which? Mortgage Advisers has a detailed remortgaging guide with all the information you need to help you understand your mortgage options and get the best deal.   

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Last updated:

May 2015

Updated by:

Joe Elvin

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.