Can I Get a Mortgage with Bad Credit?

If you have a poor credit rating, you may feel like homeownership is impossible. However, having bad credit doesn’t necessarily mean you can’t secure a mortgage. While the process may be more challenging, there are potential options available for those looking to buy their first home, move home, or remortgage with a poor credit score.  

In this blog, we’ll explore how bad credit mortgages work and how they can help you move closer to achieving your homeownership goals.  

What is a Bad Credit Mortgage? 

A bad credit mortgage is specifically designed for people with a poor credit history. Unlike standard mortgages, where lenders usually require a strong credit score, bad credit mortgages are tailored to those who have experienced financial difficulties in the past, such as missed payments, defaults, CCJ’s (County Court Judgements), or bankruptcies.  

The main difference between a bad credit mortgage and a standard one is that lenders see those with poor credit as a higher risk. Because of this, mortgages for bad credit often come with higher interest rates. This allows lenders to offset the potential risk of lending to individuals with a history of financial issues. 

Although bad credit mortgages are an option, it is important to work on improving your credit score over time. Some ways to do this include: 

• Check your credit report and ensure all information is correct 
• Make payments on time  
• Pay down credit card balances  
• Avoid new credit  

How Do Bad Credit Mortgages Work? 

Bad credit mortgages work similarly to standard mortgages, but the main difference lies in the interest rate and the terms. Mortgage lenders will take a close look at your credit history when deciding whether to approve your application or not. While the approval process may be more stringent, it’s not impossible.  

1. Higher interest rates: 

As lenders view those with bad credit as higher risk, they often charge higher interest rates than those offered to applicants with good credit scores. This can result in higher monthly payments, but by making payments on time, you can improve your credit score and potentially get a better mortgage deal in the future.  

2. Loan terms: 

Bad credit mortgages may come with less flexible terms. Some lenders may require a larger deposit, a shorter repayment period, and/or be less flexible with overpayments. It’s crucial to understand the terms of your mortgage fully before committing. 

3. Lender options: 

Not all lenders offer bad credit mortgages, and it may be harder to find one on the high street. It’s often more effective to work with specialist brokers like our mortgage advisors in Birmingham and beyond to help you find the right mortgage provider.  

What is the Process of Getting a Bad Credit Mortgage? 

1. Check your credit report: 

Before applying for a bad credit mortgage, it’s important to know your credit score and history. This will allow you to understand any issues and determine where you stand. 

2. Speak to a mortgage broker: 

It’s highly recommended to work with a mortgage advisor who specialises in bad credit mortgages. Here at RM Mortgage Solutions, our expert advisors have access to the entire market, helping you find options not available to the general public.  

3. Gather necessary documents: 

Lenders require documentation to assess your financial situation. This includes proof of income, bank statements, and your credit report. Being prepared can speed up the process.  

4. Choose a lender and apply: 

After you’ve found a suitable lender, you can submit your application. If approved, you’ll receive an offer detailing the terms, interest rate, and repayment schedule.  

5. Accept the offer and finalise the mortgage: 

If you’re happy with the terms, you can accept the offer and proceed with completing the paperwork. After this, the lender will release the funds, and you can secure your home.  

Conclusion  

While securing a mortgage with bad credit can seem like a challenge, it’s entirely possible with the right guidance. Bad credit mortgages offer an opportunity to buy a home or remortgage despite your credit history, and with our mortgage advice solutions, we’ll help you navigate the process with confidence and find a solution tailored to your unique circumstances.  

Here at RM Mortgage Solutions, we offer expert advice and support for those with bad credit to help you find the best options available. Don’t let poor credit stop you from achieving your homeownership dreams – get in touch with us today for personalised advice and assistance you can rely on.