How does poor credit affect mortgage applications?

Applying for a mortgage can be daunting, especially if you have a poor credit rating. The good news is it's definitely possible to get a mortgage with a poor credit score, but you'll have fewer options available to you.

Most high street banks won't give you a mortgage with poor credit, but there are specialist mortgage lenders out there who have experience lending to people with poor credit history, and can look at your application on a case by case basis. 

Can I get a mortgage with poor credit?

Yes, it’s definitely possible to get a mortgage with poor credit. It can make things harder than if you had a perfect score, but don’t let anyone tell you that homeownership is impossible.

Most big banks and mortgage lenders probably won't lend to you if you have a Poor or Very Poor credit rating, but there's specialist mortgage companies who will be willing to consider you. Depending on your specific situation, you might be asked to pay a higher interest rate or be asked to put down a bigger deposit, which is why it’s best to work with a specialist poor credit mortgage broker who can work to find you a competitive deal.

A lot of mortgages for people with poor credit aren't directly available to you as a borrower, they're only available through specialist lenders who work with poor credit mortgage brokers (like us!). Speaking to one of our friendly Mortgage Experts means you’re likely to find the right mortgage for you. Make an enquiry to get started.

How does poor credit affect mortgage applications?

The application process for a poor credit mortgage isn’t that different from a regular mortgage. You’ll still have to provide documentation to prove your income and show your outgoings. But some mortgage lenders for poor credit don’t do credit scoring - they instead look at your individual situation to work out how much you can afford. 

There’s a big misconception that poor credit mortgage lenders aren’t as good or aren't as careful with who they lend to. But that’s not true. Specialist lenders are regulated in exactly the same way as the high street banks - adhering to strict guidelines set out by the Financial Conduct Authority and the Mortgage Market Review. 

All mortgage companies, whether high street or specialist, will thoroughly ‘stress test’ your ability to pay. They’ll look at hypothetical situations and see if you could still pay your mortgage if something unexpected happened. And as specialists use human underwriters, they’ll be looking even more closely to make sure you’re safe to lend to. 

There’s still a lot of stigma when it comes to credit issues. People can fall into bad credit for a number of reasons, whether it’s job loss, sickness, or even a forgotten parking ticket. This doesn’t mean that they can’t be trusted and should be punished for years to come. Many of our customers have worked tirelessly to turn their lives around and were still rejected from the high street before coming to us. We’re shining a light on specialist lenders and letting more people know that there are other options out there.

Are poor credit mortgage lenders more expensive?

The old saying goes “the greater the risk, the greater the reward”. Specialist lenders  are willing to lend to those turned away from the high street, and their service is far more tailored and personalised, so their rates reflect this.

Specialist lenders position themselves as a go-between; a bridge to help people onto the property ladder where the high street would have rejected them. Think of it this way, if you can afford a mortgage but your credit score is poor right now, you probably won’t qualify for a high street mortgage. But another two years down the line, your credit will improve and you’ll have more options open to you. But not everyone has the luxury of waiting for their credit score to improve. Specialist lenders provide that opportunity to build a roadmap back to the high street, and so their rates reflect this shorter relationship. 

But just because you need a poor credit mortgage lender, doesn’t mean you can’t get a competitive deal. Working with an independent mortgage broker like Haysto will not only give you access to these lenders (that you wouldn’t have on your own) but our Mortgage Experts also have great relationships with them. They’ll know which mortgage fits your needs and can put together a fab application. Make an enquiry to find out your options. 

Will I have to pay for a poor credit mortgage broker? 

Most brokers will charge for their services. They’ll usually let you know straight away how much they charge and when you’ll need to pay. While it can seem like another cost on top of an already expensive process, using a broker really will save you money in the long run.

While it might be tempting to use an estate agent's in-house broker, they usually have the seller's best interests in mind, rather than yours. A quick sale can take priority over finding the right mortgage for you.

We're not the cheapest, but other brokers can’t do what we do. When you work with Haysto, you’re paying for your Mortgage Expert's time and expertise. The fee you'll pay reflects the complexity of your situation, but working with a specialist saves you far more money in the long run. If we can’t help you, you don’t pay a penny. 

Our team has spent years getting to know specialist lenders - the ones that use human underwriters and treat customers as individuals. Our experts have seen it all and have a proven track record of getting mortgages for people who've only ever heard "NO". Just look at our Trustpilot reviews and decide for yourself. 

Will I need a bigger deposit for a poor credit mortgage?

How much deposit you’ll need to put down for a poor credit mortgage will depend on your individual situation, and will vary between lenders. Lenders have their own criteria to work out how much of a risk it would be to lend money to you. 

Generally, the more money you can put down up front, the less of a risk you pose. This is especially the case if you have a history of poor credit. The bigger your deposit, the less money you’ll need to borrow (called loan-to-value), and the better your interest rate will be. 

If you have more serious credit issues such as CCJs or IVAs, lenders may only agree to grant you a mortgage if you put down a larger deposit. To put it another way, if you’ve been bankrupt, a lender sees you as more risky than someone who’s missed a few mobile phone payments.

However, if you can’t save a lot of money for a deposit, there are options such as guarantor mortgages or Shared Ownership which might not need as much money up front. If you need a mortgage and have poor credit, it’s a good idea to work with a poor credit mortgage broker that isn’t afraid of the tricky stuff. Our Mortgage Experts have seen it all and aren’t judgemental. They have plenty of experience getting mortgages for people in your situation. Get in touch to find out your options.