Mortgages for bad credit can be a tricky topic to navigate, as many lenders are hesitant to approve loans for individuals with faulty credit scores. It’s a common misconception that individuals with bad credit are not eligible to apply for a mortgage.

However, there are specialist lenders that are willing to provide mortgages to those with bad credit so it’s still possible to get a mortgage even with bad credit.

This blog will run through the steps you can take to improve your chances of being approved.

If you require further advice, adverse credit brokers are there to help individuals find the right mortgage for their situation, even if they have bad credit. It’s their job to find a lender who can provide a suitable mortgage deal for you.

Your credit score

A credit score is the report of a person’s financial history and is used by lenders to determine their creditworthiness. This report is checked when applying for loans, such as a mortgage or credit card, and can make or break an application. If your credit score is considered ‘bad’, that means you have adverse credit or a low credit score, which can make it more difficult to find a lender willing to offer you a mortgage.

The first step in getting a mortgage with bad credit is to understand your credit score and what factors are impacting it. Your credit score is based on a number of factors such as your payment history and length of credit history. Even if it’s not your first time investing in property, it is important to check your credit report and address any errors or discrepancies that may be impacting your score to give yourself the best chance.

It’s also important to understand what can impact your credit score, so you can avoid things that can lower it. This includes making late payments, not paying bills at all, having no credit history, bankruptcy, applying for several credit cards, and applying for several loans can all lower your credit score. Financial blips will stay on your credit record for six years, so one small late payment will still show up to lenders for years to come.

The next step is to work on improving your credit score as much as possible before applying for a mortgage. This can be done by paying off any outstanding debts, making all your payments on time, and keeping your credit utilisation low. Additionally, you should avoid applying for new credit or opening new accounts, as this can have a negative impact on your score.

However, if you have a low credit score, adverse credit mortgages and subprime mortgages are available for people in this situation. They typically require higher interest rates, larger deposits, and a good income. All these factors can help increase your chances of getting accepted for a mortgage with bad credit.

The best mortgage for you

Another important step in getting a mortgage with bad credit is to have a good understanding of the different types of mortgages available. Mortgages for bad credit may have higher interest rates or require a larger down payment, but there are also options such as FHA loans, which are backed by the Federal Housing Administration and have more lenient credit requirements. Additionally, you can explore options such as non-conventional loans, which may have more flexible requirements for credit scores and income.

When it comes to finding a lender for your mortgage, it is important to shop around and compare different offers. You may find that some lenders are more willing to work with individuals with bad credit than others.

It is also important to have a good understanding of the terms and conditions of your mortgage, including the interest rate and any fees associated with the loan. Be sure to read the fine print and ask any questions you may have before signing on the dotted line.

Speak to an adverse credit mortgage advisor

There are specialist mortgage advisors that can help you find a lender suited to your financial circumstances. They will look through your finances and discuss the options available for you. If you’re unable to find a local mortgage broker to help with bad credit mortgages, speaking to an online mortgage advisor is the way to go, these are specialist bad credit mortgage advisors that can help you virtually.

Getting a mortgage with bad credit can be a challenge, but it is not impossible. By understanding your credit score and working to improve it, understanding the different types of mortgages available, and finding the right lender with help from a specialist broker, you can increase your chances of being approved for a mortgage.

If you work on creating a solid plan for repaying the mortgage this can also help you demonstrate to lenders that you are a responsible borrower and that you are committed to repaying the loan. With these steps, you can take the first steps towards homeownership.