Joint Mortgage Bad Credit
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Joint Mortgage Bad Credit
Can you get a joint mortgage if both or one applicant has bad credit?
Yes, but it’s not quite as simple as that. We need to look at the level of bad credit you’ve got. Some lenders will lend based on just one of the applicants, if the affordability is there. It depends on what you want to do, and there are lots of scenarios to explore.
What types of bad credit affect a joint mortgage application?
You’ve got county court judgments (CCJs), individual voluntary agreements (IVAs), defaults – which could be a late payment – or debt management plans.
All these things can contribute. If you’ve got any of those in the background, you could have issues in getting a mortgage.
Are there specific lenders who deal with joint mortgages with bad credit?
There are lenders you might choose once we know the level of bad credit. For example, if you’ve got a CCJ for £5,000, you’ll need a specific lender rather than mainstream banks – one that is more amenable to the bad credit. It all depends on the level of credit issues you have.
With just a £50 CCJ, some mainstream lenders may be okay. I always advise you to get your credit file and see what the issues are. Once we analyse that as brokers, we can determine which is the best lender for you.
Does being married make a difference when applying for a joint mortgage with bad credit?
It can count against you to a certain degree – in that if your partner has bad credit and you apply for a mortgage individually, your link with that partner may hinder what you can do.
Being married isn’t going to help in that respect, because you’re treated as individuals in terms of your credit file.
Can I still get a joint mortgage if I have had previous bankruptcy or repossession?
Yes, for bankruptcy. But again, it comes down to the different lenders. Most lenders would want you to have satisfied that bankruptcy for at least six years – so it’s off your credit file and there’s no record of it.
Some lenders just don’t like you ever to have been previously bankrupt, regardless of how long ago. It just doesn’t fit their profile.
With repossession, we’d have to see exactly what the terms of that were. We’d then do a bit of research based on the specifics.
What if I have been declined for a mortgage with bad credit previously? What happens next?
Effectively, it would be reset. Let’s say, for example, you were bankrupt and you tried to get a mortgage after three years and were declined. If you’re now outside that six years and everything else is squeaky clean, your credit profile looks much better.
It will all come down to the current credit score and what the lender will allow, but you’re almost looking afresh at this point.
What if I’m a first-time buyer and have bad credit? Will this affect me getting a joint mortgage?
As a first-time buyer, there’s no specific effect. If you’ve got bad credit, that will affect who you can go with, the same way as for anyone else.
We’d need to assess what the bad credit was for, and that would determine which lender you end up with. Banks aren’t going to let you off because you’re a first-time buyer, or treat you more harshly.
It’s all about your credit file. If you’ve missed a payment they might not like that and won’t lend – but others may.
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Do we need a larger deposit for a joint mortgage with bad credit?
It depends on the situation and the lender. For example, some lenders may not lend to you at 95%, but will at 90%. That doesn’t necessarily mean you’ve got bad credit.
It might just be that at 95%, something in your circumstances – which could be your credit score – isn’t quite enough to hit a lender’s internal requirements. What happens next will depend whether you can stretch to that 10% deposit.
If not, as brokers, we would find the most suitable option for you at 95%. Our job is always to try and get you the most favourable rate for your scenario.
What is the minimum credit score required for a joint mortgage with bad credit?
There isn’t one. No lender will say that you need a score of 554 or above for a mortgage. Each individual lender has their own internal credit assessment.
For example, if you’ve got really bad credit, certain lenders will just decline your application because your credit situation doesn’t fit the profile they want. Other lenders may be okay with it.
There just isn’t a single credit score that determines what you will get from lenders. It’s all down to the overall profile that will be generated from your credit file when the lender looks at your application.
Can we use a guarantor for a joint mortgage if I have bad credit?
Guarantor mortgages have changed in recent years. There are some opportunities, but the most common is Joint Borrower Sole Proprietor, where your parents or other family join the mortgage to help the overall affordability.
But lenders won’t just ignore a bad credit score in the background. If, for example, two people couldn’t get a mortgage because their credit was bad, adding parents on isn’t necessarily going to improve that. The bad credit in the background will still override the two people joining.
Most typically, Joint Borrower Sole Proprietor is used to enhance affordability. But if a lender would accept both parents coming onto the mortgage – and maybe dropping the person with a bad credit, that could potentially work.
The lender needs to be happy that this is the reason you’re doing it. Some may not like you taking someone off the mortgage because of their bad credit.
How long do I have to wait after improving my credit score before applying for a joint mortgage?
Perhaps there’s something on your file like a CCJ, which wasn’t your fault. If you can get that CCJ removed from your credit file, it can take four to six weeks or even longer to disappear.
You would need to wait for that to happen before you do an application, otherwise the lenders will still see it.
You’ve shown how a mortgage broker can help throughout this episode. Have you got anything else to add?
It’s a bit of a minefield out there. I see people all the time who have tried to do this on their own. But we’ve got the experience and we know who we can potentially go to, which makes it a lot quicker and easier. We take all the grief and hassle away from you.
That avoids you approaching lenders that we immediately know wouldn’t look at your situation. Instead, we can go straight to the ones that will. That’s what we can do for anybody – basically we make the process easier and hassle-free.
Key Takeaways:
- Getting a joint mortgage with bad credit depends heavily on the level and type of bad credit (CCJs, IVAs, defaults, debt management plans, bankruptcy, repossession) and the specific lender’s criteria.
- Mainstream banks may accept minor issues (e.g., a small CCJ), but significant bad credit (e.g., a large CCJ or recent bankruptcy) usually requires a lender more amenable to these circumstances.
- Lenders use their own internal credit assessment systems, meaning one lender might decline an application based on a bad credit profile while another accepts it. The overall credit profile is what matters.
- Being a first-time buyer does not change the impact of bad credit; this affects a mortgage application in the same way it would for any other applicant.
- A mortgage broker can identify who is most likely to approve a loan based on the credit profile, making the process quicker and less stressful.
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