Limited Company Mortgage Bad Credit

Can I get a mortgage through my limited company if I have bad credit? How does having bad credit affect my ability to get a mortgage?

Yes, you can potentially get a mortgage, but it will depend on what the bad credit is. Generally speaking, Buy to Let mortgages are more difficult to get with bad credit in the background. The requirements are a lot tighter than for a residential mortgage.

Even for a Buy to Let in personal names, the credentials are tighter around credit issues. When you’re buying through a limited company, that company could be brand new and wouldn’t necessarily have any credit profile at all, so its directors are its personal guarantors.

If you have bad credit, that will come up when you do an application. If you do have issues, the application may be declined. We would then move along to a more adverse lender with more lenient requirements.

What is considered bad credit in the UK?

Bad credit could include County Court Judgments (CCJs), a debt management plan, an Individual Voluntary Arrangement (IVA), defaults or missed payments.

With a mortgage, you don’t necessarily need to have bad credit for it not to fit with a lender. Perhaps there’s prior bankruptcy in the background, or simply high utilisation of credit.

I’ve had a couple of these recently, where we look at a client’s credit file, and there are no missed payments, no CCJs or IVAs. They may just have one credit card – but they’re using 95% of their available balance. They may even have three or four credit cards they’re not using, but that one, heavily used card can be an issue.

Bad credit doesn’t necessarily mean missing payments. High utilisation of credit can be a no-no with lenders.

Are there specific lenders who specialise in mortgages via limited companies with bad credit?

Yes. And the more adverse the lender, the more expensive a mortgage product is going to get. You’ll probably find there is a last resort lender, although I’m not going to name names.

Ultimately, you’ve got to weigh it up. If there’s only one option, does it make financial sense in terms of what you want to do? Remember, you may just be with them for a couple of years. You will hopefully get your credit score back up and then remortgage away to a more cost-effective option.

When you do any application, you might not necessarily know about any bad credit issues. That’s why we need a copy of your credit file. We can then make an application based on what that credit file tells us.

If we know beforehand there’s an issue with credit, again, we’d ask for your file so we can save time by going directly to a lender that will accept your credit scenario.

Can I still get a mortgage through my limited company if I’ve had previous bankruptcy or repossession?

Yes. It’s going to depend on how long ago that bankruptcy was. Typically, bankruptcy stays on your file for six years and most lenders need that six years to have passed. A couple might accept you once you reach three years past the bankruptcy, but it limits your choices.

It’s not going to be a mainstream lender if that’s fairly recent. If it’s within three years, we’ll struggle to find you a mortgage at all.

What happens if I’ve previously been declined for a mortgage through my limited company?

Again, if you come to me and tell me that, I’ll ask for a copy of your credit file. Perhaps you were declined a year ago and the situation has now changed. Whatever was in the background may have dropped off. If it’s now within a lender’s parameters, you’ve got options – you could even potentially go to a mainstream lender.

Once we know what’s on the credit file, we can deal with that. Perhaps something happened two years ago and the lender needs it to be three years ago. We won’t waste time with those lenders. Your individual circumstances will determine who we end up with.

What if I’m a first-time buyer with bad credit? Will this affect me getting a mortgage through a limited company?

First of all, not every lender will be okay with you being a first-time buyer and first-time landlord who’s buying through a limited company. Initially, we’re going to filter down to all the lenders to find those who are happy with that scenario. That’s going to reduce your numbers quite a bit.

We then look at your credit file and decide which of this smaller list of lenders it will fit with. We’ll go to each lender to try and get the most suitable outcome.