What is ‘bad’ credit Mortgage?
If your credit score is low, Most lenders will not offer you a loan or mortgage as you have bad credit. Your credit score could be low because of missed repayments in the past, no credit history or filing bankruptcy. Bad credit makes you appear less creditworthy amongst lenders as you seem less likely to repay the mortgage.
Bad credit mortgages don’t exist. In fact the mortgage affordability assessment of a bad credit mortgage is the same as any. They are only termed as bad credit mortgages due to the fact that the applicants will most likely fail credit checks which most mortgage lenders have for their standard mortgage porducts.
The terms bad, adverse mortgages or subprime mortgages allow first-time buyers with little or no credit history to get on the property ladder. Bad credit mortgages usually have high interest rates but after a few years of repaying their mortgage in time a first-time buyer will be able to remortgage to a better deal as their credit score will have likely increased in this time.
So can you get a mortgage with bad credit?
Due to the risk of bad credit borrowers the interest rates are incredibly high and the mortgage lender will usually request a larger mortgage deposit.The borrower will not qualify for any first-time buyer mortgage schemes such as help to buy equity loan or the shared ownership mortgage scheme if they have been declared bankruptcy within 6 years.
To qualify for the schemes above You will need a large deposit- 15% minimum and your credit file will need to be okay with no defaults or bankruptcy.