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Bad Credit Mortgages

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How do bad credit mortgages work?

Adverse credit mortgages or bad credit mortgages work in the same way as regular mortgages. The only difference is that they attract higher interest rates, and you get a lower limit on the amount you can borrow. Some lenders also ask you for a larger deposit such as 25% of the property value, as opposed to regular mortgages that can attract a lower deposit.

Bad credit mortgages attract higher interest rates and higher deposits because you are considered to be a high-risk lender. In the mortgage market, the higher the credit score, often the lower the deposit you can pay and the lower the interest rates. Therefore, people with bad credit get higher rates. It is advisable to consider the interest rate when comparing lenders to find one with the best rates for bad credit mortgages and one which fits your personal circumstances.

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How can I improve my chances of getting a bad credit mortgage?

Ensure you meet your regular payments like utility bills and credit card payments. This shows your lender that you are working towards repairing your bad credit and that you can be relied on to make your payments.

Reduce your spending as much as you can. Keep your monthly spending consistent and within your means. It is ideal to have money left over each month.

Ensure you let the lender know if you have an explanation for your bad credit. This can be an illness that left you incapacitated for a while or an unemployed period.

Only go for property you can comfortably pay for month to month. This will ensure you do not damage your credit score again in the future.

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Do you have bad credit?

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What causes bad credit?

Any of these can cause bad credit: Low Credit Score; Missed payments on unsecured credit such as loans or mobile phone contracts; Defaults and County Court Judgements (CCJs); Debt Management Plans (DMP); Secured Loan Arrears (missed mortgage payments); Individual Voluntary Arrangement (IVA) and Bankruptcy

I have a low credit score, can I still get a mortgage?

Getting a mortgage with less than perfect credit is possible and quite common today, although you may end up paying higher interest rates and need to provide a slightly larger deposit. There are mortgages designed specifically for people with poor credit, and some lenders specialise in offering these. These are known by various names including bad credit, adverse or sub-prime mortgages. To find the best deal you are best to use a broker who can explore a wide-range of options for you.

Can I still get a mortgage with a CCJ?

More and more lenders are considering approving mortgages for people with CCJ’s. Each lender has a varied approach to treating CCJ applications and what they decide as acceptable. As with an ordinary mortgage application, other criteria come into play such as credit history, property type, affordability etc. All of these variables can make for a tricky process in choosing an appropriate lender and progressing an application. Remove the hassle and contact us today to see how we can help.

I have missed payments, can I still get a mortgage?

If you have a history of one or more late payments it is still possible to apply for a mortgage. Lenders look at lots of things including how long ago the missed payment was, what product the missed payment was in connection with, and also if the debt is still outstanding. Fortunately, there are lenders out there who still give competitive mortgages to people with late payment histories, some even at competitive rates with minimal deposits.

What do I do next?

Get in touch! Write us an email, give us a call, or fill in one of our forms and we will get back in contact at a time convenient for you.