A poor credit history doesn’t need to end your hopes for homeownership, with lenders offering a range of deals for individuals who’ve had CCJs, IVAs and discharged bankruptcies.
And by saving more money and reversing your credit damage with time, it’s even easy to get a competitive mortgage rate.
But who'll love you for a mortgage if you’ve had some financial problems previously? We’ve combed the relation to a lot more than 30 lenders to help you find out which will accept borrowers with a bad credit score histories, and what criteria you’ll need to meet to get a great deal.
Bad credit mortgages: the number of deals are available?
Last month, Which? analysed the mortgage market and located that the third of deals are for sale to individuals with a less-than-perfect credit history.
And although the majority of these items were restricted to those who’ve had CCJs, there have been some offers available for people with historic IVAs and bankruptcies, too.
Our research found that to get a mortgage with bad credit, you might need a bigger deposit than you would for a standard residential loan – with the majority of deals available at 75% loan-to-value (LTV).
This implies that you’ll possess the greatest choice when you’ve had a 25% deposit.
Mortgages for different kinds of bad credit
Lenders that will accept applications from people with poor credit generally fall under two classes:
The table below shows the general criteria lenders impose for applicants with CCJs, IVAs and bankruptcies.
Getting mortgages following a CCJ
A County Court Judgment (CCJ) is usually issued when you’ve failed to pay money you owe to lenders, and reasonable attempts to recoup the money (such as letters and late payment notices) happen to be exhausted.
The good news is that there are many specialist mortgages open to people who’ve had CCJs – with more than 20 lenders operating within this market.
Deals are for sale to individuals with CCJs worth as much as lb5,000, but to get the best rate you’ll need to have had maximum CCJs of lb250 to lb500.
The table below shows the cheapest initial rates on mortgages that state they are offered to individuals with CCJs.
|Max LTV||Max CCJs||Lender||Deal type||Initial rate||Revert rate||APRC||Fees|
|75%||Up to lb250*||Atom Bank||Two-year fix||1.44%||4%||3.7%||lb1,200|
|75%||Up to lb500||Accord||Two-year fix||1.69%||4.25%||4.2%||lb495|
Getting mortgages after an IVA
If a borrower can’t manage to pay off the money they owe in full, they are able to enter into a contract with their lender – known as an individual voluntary agreement (IVA).
Only seven lenders offer specialist deals for borrowers who may have had an IVA, and also to obtain a mortgage you’ll need to have settled (or ‘satisfied’) your IVA.
While a number of products are readily available for those who have settled their IVAs in the last 12 months, the vast majority of deals are only available if a minimum of 3 years have passed.
The table below shows the cheapest initial rates available for people who have satisfied their IVAs for three or 4 years.
|Max LTV||IVAs||Lender||Deal type||Initial rate||Revert rate||APRC||Fees|
|60%||Satisfied four years||Skipton||Two-year fix||1.59%||4.99%||4.5%||lb995|
|75%||Satisfied three years||Accord||Two-year fix||1.69%||4.25%||4.2%||lb495|
Your mortgage options after bankruptcy
Bankruptcy happens when all your debts are wiped off and your assets are sold to repay them. A bankruptcy ends having a ‘discharge’ notice, which is normally issued 12 months after the date of the bankruptcy order.
You can’t obtain a mortgage when under a bankruptcy order, and also the longer ago you were discharged, the greater options will be open to you. To get a competitive rate, you’ll must have been discharged for at least three years.
The good news is that you can obtain a mortgage at up to 90% LTV having previously been declared bankrupt.
The table below shows the lowest initial rates offered at three popular LTV levels for people who have been discharged from bankruptcy.
|Max LTV||Bankruptcy||Lender||Deal type||Initial rate||Revert rate||APRC||Fees|
|60%||Discharged four years||Skipton||Two-year fix||1.59%||4.99%||4.5%||lb995|
|75%||Discharged three years||Accord||Two-year fix||1.69%||4.25%||4.2%||lb495|
|90%||Discharged four years||Skipton||Two-year fix||2.01%||4.99%||4.7%||lb995|
How to get a mortgage with bad credit
If you have a less-than-perfect credit history, you should attempt to repair this before you apply for any mortgage.
The are some steps you can take to enhance your credit rating with time. As a starting place, ensure you’re around the electoral roll, limit any credit applications and consistently pay any debts promptly each month.
As we mentioned earlier, to get the best rates you will need in order to save up a bigger deposit. Having a larger chunk of the property outright could make you a less risky proposition for lenders, and open the possibility of more choice and better home loan rates.