Bad Credit Mortgage Rates

There’s no minimum credit score required for a mortgage, but the lower your credit score, the smaller the pool of lenders that will consider your application and the lower your chances of securing a great deal.

Let’s explain how it works. Bad credit events such as missed payments can negatively impact your credit score which is indicative of your overall credit profile. Most lenders assign you a credit score when considering your application. They use the information held by credit reference agencies – e.g.  Equifax, Experian and TransUnion – to do this.

Some lenders, such as those specialising in bad credit mortgages, don’t credit score in the traditional way. They look at each application on a case-by-case basis and learn about the circumstances that led to the bad credit event.

This means that while a high street lender may reject you because of a bad credit event, a bad credit mortgage lender will be more likely to consider you. A specialist mortgage broker like John Charcol can help you find a lender to suit your circumstances.

It's possible to get a mortgage if you have a low credit score or bad credit history. But you'll likely find it more challenging than someone with a clear credit history. A bad credit history will reduce the number of lenders prepared to approve your application for a mortgage. The good news is that many lenders specialise in bad credit mortgages and our advisers at John Charcol can help you identify the right one for your situation.

Lenders take into account several significant risk factors when assessing mortgage applications. This means that you must ensure that everything else in your circumstances matches the lender criteria, for instance, the type of property you want to buy and its affordability. It will also greatly help your position if you can put down a larger mortgage deposit than the minimum.

As soft searches are usually carried out during the DIP (decision in principle) stage of the application process, you can get a good idea of whether you're likely to be accepted without damaging your credit file with hard searches. If you're concerned about the type of searches the lender will use at the DIP stage, check with the broker or lender beforehand.

Generally, the higher the deposit you can put down, the better the interest rates you'll be offered – this also applies with bad credit mortgages. With a lower LTV (loan-to-value), you'll pose a lower lending risk, meaning you could be offered a better rate.

LTVs are usually a maximum of 95% for a residential mortgage and 75% - 85% maximum for a buy-to-let mortgage. It's common for the maximum LTV to be lower for bad credit mortgages.

Securing a mortgage at a competitive rate when you have a bad credit history can be extremely challenging, especially if you try to go at it alone. Working with a specialist mortgage broker like John Charcol can increase your chances of getting a bad credit mortgage and securing a cheaper rate.

We’re a whole of market broker and we’re bad credit mortgage experts. We learn about your situation and use our knowledge to approach the right lenders with the best deals, making your experience as straightforward and easy as possible.

Get in touch with us today on 0330 433 2927 to find out how we can help you.