A bad credit history doesn’t have to end your dreams of homeownership, with lenders offering a range of deals for people who’ve had CCJs, IVAs and discharged bankruptcies.
And by saving some more money and improving your credit score over time, it’s even possible to get a competitive mortgage rate.
But who will accept you for a mortgage if you’ve had some financial problems in the past? We’ve combed the terms of more than 30 lenders to help you find out which will accept borrowers with poor credit histories, and what criteria you’ll need to meet to get a good deal.
- If you’ve had problems with credit in the past and want to get a mortgage, call Which? Mortgage Advisers on 0800 197 8461.
Bad credit mortgages: how many deals are available?
Last month, Which? analysed the mortgage market and found that a third of deals are available to people with a less-than-perfect credit history.
And although the vast majority of these products were limited to those who’ve had CCJs, there were some offers out there for people with historic IVAs and bankruptcies, too.
Our research found that to get a mortgage with bad credit, you might need a bigger deposit than you would for a standard residential loan – with the majority of deals available at 75% loan-to-value (LTV).
This means that you’ll have the greatest choice when you’ve got a 25% deposit.
Mortgages for different types of bad credit
Lenders that will accept applications from people with bad credit generally fall into two categories:
- Those that offer specific mortgages for people with bad credit. These tend to be specialist lenders that offer a suite of deals for people with credit problems.
- High-street lenders that don’t offer specialist products but will consider applications from people with bad credit.
The table below shows the general criteria lenders impose for applicants with CCJs, IVAs and bankruptcies.
Getting mortgages after a CCJ
A County Court Judgment (CCJ) is usually issued when you’ve failed to pay money you owe to lenders, and reasonable attempts to recoup the cash (such as letters and late payment notices) have been exhausted.
The good news is that there are plenty of specialist mortgages available to people who’ve had CCJs – with more than 20 lenders operating in this market.
Deals are available for people with CCJs worth up to £5,000, but to get the best rate you’ll need to have had maximum CCJs of £250 to £500.
The table below shows the cheapest initial rates on mortgages that state they are available to people with CCJs.
|Max LTV||Max CCJs||Lender||Deal type||Initial rate||Revert rate||APRC||Fees|
|75%||Up to £250*||Atom Bank||Two-year fix||1.44%||4%||3.7%||£1,200|
|75%||Up to £500||Accord||Two-year fix||1.69%||4.25%||4.2%||£495|
Source: Moneyfacts. 25 February 2019. *max three CCJs in last 36 months, max one in last 12 months
Find out more: get to grips with the details in our guide on getting a mortgage with a CCJ.
Getting mortgages after an IVA
If a borrower can’t afford to pay off their debts in full, they can enter into a contract with their lender – known as an individual voluntary agreement (IVA).
Only seven lenders offer specialist deals for borrowers who have had an IVA, and to get a mortgage you’ll need to have settled (or ‘satisfied’) your IVA.
While a handful of products are available for people who have settled their IVAs in the last 12 months, the vast majority of deals are only available if at least three years have passed.
The table below shows the cheapest initial rates on offer for people who have satisfied their IVAs for three or four years.
|Max LTV||IVAs||Lender||Deal type||Initial rate||Revert rate||APRC||Fees|
|60%||Satisfied four years||Skipton||Two-year fix||1.59%||4.99%||4.5%||£995|
|75%||Satisfied three years||Accord||Two-year fix||1.69%||4.25%||4.2%||£495|
Source: Moneyfacts. 25 February 2019.
Your mortgage options after bankruptcy
Bankruptcy is when all of your debts are written off and your assets are sold to repay them. A bankruptcy ends with a ‘discharge’ notice, which is normally issued 12 months after the date of the bankruptcy order.
You can’t apply for a mortgage when under a bankruptcy order, and the longer ago you were discharged, the more options will be available to you. To get a competitive rate, you’ll need to have been discharged for at least three years.
The good news is that you can get a mortgage at up to 90% LTV having previously been declared bankrupt.
The table below shows the lowest initial rates available at three popular LTV levels for people who have been discharged from bankruptcy.
|Max LTV||Bankruptcy||Lender||Deal type||Initial rate||Revert rate||APRC||Fees|
|60%||Discharged four years||Skipton||Two-year fix||1.59%||4.99%||4.5%||£995|
|75%||Discharged three years||Accord||Two-year fix||1.69%||4.25%||4.2%||£495|
|90%||Discharged four years||Skipton||Two-year fix||2.01%||4.99%||4.7%||£995|
Source: Moneyfacts. 25 February 2019.
How to get a mortgage with bad credit
If you have a less-than-perfect credit history, you should attempt to repair this before applying for a mortgage.
The are some steps you can take to improve your credit score over time. As a starting point, ensure you’re on the electoral roll, limit any credit applications and consistently pay any debts on time each month.
As we mentioned earlier, to get the best rates you might need to save up a bigger deposit. Owning a larger chunk of the property outright will make you a less risky proposition for lenders, and open the possibility of more choice and better mortgage rates.
Find out more: learn more about applying in our full guide on bad credit mortgages.
Advice on your mortgage options
If you’re considering applying for a mortgage, it can be helpful to get advice from a whole-of-market mortgage broker, who can look at all of the available deals to find the right one for you.
To speak to an expert, call Which? Mortgage Advisers on 0800 197 8461 or fill in the form below for a free callback.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which 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.