Frequently Asked Questions About Bad Credit Mortgages

May 3, 2023

Applying for a mortgage can seem like a minefield, and if you have a poor credit history, the process can be even more complicated. However, it may still be possible to get a deal that suits your circumstances with some research and preparation. Here are some of the most frequently asked questions about bad credit mortgages.

Does a bad credit score for one partner affect a joint mortgage?

If you or your partner has a bad credit history, you will probably be wondering how this affects your mortgage prospects. The fact is that lenders will want to look at both your credit histories. However, there is no definitive position that a mortgage company will take in this circumstance as they all use different assessment criteria.

It will also depend on the frequency and severity of the issues with the bad credit score. For example, one or two late payments will be much less significant than a default, a county court judgement, or a bankruptcy. The lender will also take into account other factors such as income and monthly outgoings to determine if you can afford the mortgage.

Some lenders specialise in mortgages for adverse credit situations. However, it’s worth asking a broker for advice because they will know which ones are most likely to accept your application.

Can I apply for a mortgage on my own if my partner’s credit score is bad?

Bear in mind that most lenders will insist on a joint application if you are married, because of potential future disputes about who has the right to live in the property. If you live with a partner but are not married, then you could apply singly for a mortgage, but only one income will be taken into consideration, reducing the amount you can afford to borrow.

Can I get a mortgage with an IVA?

Individual Voluntary Arrangements (IVA) are designed to help people pay off their debts at a rate they can afford. If you have finished paying off your IVA, then it is still possible to get a mortgage. However, it will be recorded on your credit report for the next six years and some lenders will be very cautious about making an offer.

It is best to seek advice from IVA mortgage specialists in these circumstances. Almost all lenders will require at least a 10% deposit. If you are currently in an IVA, then it will be much more difficult to source a mortgage deal, although it is not impossible.

Can I get a mortgage with a debt management plan (DMP)?

DMPs are put in place to help people repay debts in a manageable way. It is possible to get a mortgage if your DMP is completed, although rarely with a mainstream mortgage lender. If your DMP is still active, then your options are far more limited.

A small number of specialist lenders might consider your application, but even then you are likely to need a deposit of at least 15%.

Your home may be repossessed if you do not keep up with your mortgage repayments.

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