First-Time Buyer Mortgage Bad Credit History

Can you buy a house with bad credit as a first-time buyer?

Yes, you absolutely can. The options are slightly limited, but there are specialist lenders in the market to assist people. It’s almost like credit repair, to get you back into a space where all lenders will look at you again.

Can I get a mortgage as a first-time buyer if I have a CCJ, IVA, default, a bankruptcy or a payday loan?

Yes, in general, but it will depend on how severe the issue is and how much time has elapsed since.

Active IVAs and bankruptcies can be harder, for sure. Some specialist lenders might consider those, but it will be on a case-by-case basis. We’ve really got to unpack the details with the client, be very open and honest about what’s happened, and take a forensic look at dates and times.

In the majority of circumstances, there will be an option. The key is fitting that within your budget, which is all-important as well.

Do first-time buyers need a credit score? Can I get a mortgage if my credit score is very poor?

Yes, you will always need some form of credit score. Lenders always check your history and score. But if a score is low, a lender won’t necessarily say no. Some lenders just check your history – which could be good or bad, but the number on a credit score isn’t always relevant.

A low score wouldn’t automatically stop you, but it might hinder the choice. We might have fewer lenders, although that doesn’t have to be a terrible thing. It could mean you need a slightly larger deposit, or the rates might be a little higher to reflect the risk the lender is taking.

What is the best home loan for a first-time buyer with bad credit?

There’s no single best option. Our job as brokers is always to find the right options for a client given their circumstances. That’s always our primary objective. It’s all dependent on your situation, so we want to have a forensic look at that.

We want to see how close to the high street we can get you – that’s what we’re employed by our clients to do.

We want to do that in a very open, honest format and talk through any issues there may have been. It isn’t taboo. It’s okay to talk about it because even if you can’t get a mortgage today, you could very soon. That’s the bit we really want to uncover as quickly as possible.

We work with our clients to explore the best options as an independent broker.

How much deposit will I need? How much can I borrow if I have bad credit?

Once we’ve had that forensic look, we decide whether it’s best to choose a credit repair route with a lender that will accept your past credit blips.

With those lenders, you often need a larger deposit, depending on what that credit blip looked like. That could feasibly be anything from 15% to 25% deposit, but there may be opportunities to obtain a mortgage with 10% or even 5%. We’re very open and honest with our clients about the options as we go through.

In regards to how much you can borrow, if we base it on four times your income, we’re not going to go far wrong. We look at the whole piece – your income and your outgoings. We try to place any case with a lender to give you exactly what you’re looking for.

Most lenders have an affordability-based model, so we look at the whole situation and then choose two or three options. We then run affordability checks with those two or three lenders.

It might be that a more expensive lender will offer more borrowing – and sometimes that suits our client best. We’ll work together to find a solution that works for all parties.

What’s the process of applying for a mortgage with bad credit as a first-time buyer?

The way we take on a new case is broadly the same in all circumstances. We want to look at income, outgoings, credit profile, history and score. We also find out what your goals and aspirations are, because that forms part of our advice process.

In a situation where there might have been some bad credit, it’s about trying to rebuild that score – so that on your remortgage in a few years’ time, we can bring you back to the high street. At that point we’ll have even more lenders to choose from.