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Can I Get A Mortgage With Poor Credit?

If you have poor credit, you still could be able to get a mortgage. It will depend on your exact credit rating and on the lender that you are working with. Additionally, it could incur higher rates and fees.

Always remember that a mortgage is a type of long term loan and that lenders will assess applicants differently when it comes to these when compared to the likes of payday or other shorter term loan options you may consider. 

Can I get a mortgage with bad credit?

Whenever you apply for a mortgage, it will involve a credit check from the mortgage lenders. They will want to look at your credit history to assess how you manage your finances including factors such as existing debt and credit utilisation. They will also want to check your income, savings and monthly outgoings. The reason for this is for them to see if you can afford to keep up with monthly payments.

What do mortgage lenders consider to be bad credit?

The majority of lenders do not actually require a specific minimum credit score in order to buy a home. However, this means there is a greater level of variation between different mortgage lenders. Generally speaking, if you have a credit score lower than 500, it might be difficult to get a mortgage. If this is the case, it may be worth building up your credit score before applying.

What factors should you consider when applying for a mortgage with poor credit?

If you are applying for a mortgage with poor credit or even with a very bad credit score, there are certain steps you can take to ensure that you are presenting yourself in a good way to mortgage lenders.

Meet your regular payments – if you can meet your regular payments, such as credit card payments and utility bills, and pay them on time and in full, it shows lenders that you are a responsible borrower.

Cut costs – if you can reduce your expenditure before applying for a mortgage, it will show lenders that you are able to manage your monthly outgoings. The goal should be to have money left over at the end of each month rather than spending all of your income.

Regularly review your credit report – checking your credit report allows you to spot any potential errors and address them. If you spot anything that is inaccurate, you can contact the relevant credit bureau and ask them to amend the information.

Be realistic about what you can afford – when choosing a property, make sure you are thinking realistically about what you can afford as this will make it more likely that you will be approved for a mortgage.

  • Consider a guarantor – if you have poor credit, you may need a guarantor to assure lenders that your monthly payment obligations will be met. This is usually a trusted older relative or payment.
  • Check eligibility – before applying for a mortgage, you can check which lenders are more likely to accept you.
  • Deposit – to apply for a mortgage, you will need to have a decent deposit; typically 10-20% of the property value.
  • Can you buy a house without a mortgage if you have a bad credit score?

If you have a bad credit score and if you have been rejected in the past, it can be more difficult to secure financing as you need to demonstrate to mortgage lenders that you can keep up with monthly payments. However, if you have saved up enough cash, your chances may be better. It is possible to buy a house as a cash purchase if you have enough money saved up, negating the need for financing although this is unrealistic for many people.

If you have a lot of cash saved up, you can use it to make a larger-than-normal down payment for a mortgage. The more cash you can put as a down payment, the more likely you are to be approved for a mortgage as the lenders have to put less money forward.

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