You might think that it would be impossible for you to get a mortgage if you have a bad credit score.
However, this is not the case and it is possible to get a mortgage even if you have bad credit or poor credit history.
You might find it harder to be accepted, but looking outside of the box such as looking to borrow money online might help you find the mortgage that you are looking for.
This guide takes you through whether it is possible to get a mortgage if you have bad credit and top tips on how to get a mortgage or look for a mortgage when you have a poor credit rating.
Is It Possible to Get a Mortgage with Bad Credit?
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Yes, it is definitely possible to get a mortgage with bad credit. You may need to shop around a bit longer to find the best deal but mortgages for those with bad credit do exist. In some US states like Texas, laws and regulations are a little more flexible in some cases when compared to other states like New York and Arkansas, so you may be more likely to be able to find a bad credit mortgage there over other areas of the country.
You may find that the interest rates on your mortgage are slightly higher but a bad credit mortgage allows you to purchase the property you want whilst also working on repaying your loan and building your credit score.
It is important to understand that mortgages are secured loans and this means that if you do not repay your mortgage on time then it is possible that your house will be repossessed.
Before taking out a mortgage with bad credit make sure you will be able to afford repayments, otherwise, it might be wise to save up a bit more and improve your credit score before deciding to purchase a property.
How to Get a Mortgage with Bad Credit
Although, as mentioned, getting a mortgage with bad credit might cost you a little more, it may be more appealing to you than continuing to pay rent.
Hugo Anglesford of Doddler explains: “Having bad credit doesn’t always mean you can’t get the mortgage you need. However, it will limit your options and will mean that any mortgage you do get will likely cost more, as lenders need to manage their risk. If you have bad or very bad credit, you will be deemed a greater risk to any lender and so they will charge accordingly.”
Here are some top tips in order to help you get a mortgage even if you have bad credit:
Look at different deals
Every mortgage lender is different and some will offer you lower rates than others. Shopping around and getting multiple quotes can save you thousands of pounds so make sure you have found the right mortgage for you.
Look outside of banks
Although banks are traditional mortgage lenders, it is worth looking outside of banks and online lenders to see if they can help you get the mortgage you need. Some of these will likely offer better deals than high-street banks.
Explore bad credit loans
Especially if you are a first-time buyer it may be worth looking to see if you can get a bad credit loan to help you afford your mortgage and your repayments. These loans also help you to build up your credit score as well.
Do not make any big financial changes
A new credit card or a big purchase may push down your credit score, so avoid taking on any new debt during your mortgage application process.
Find a co-signer or guarantor
If you have bad credit then it may be worth asking a family member or friend to be a co-signer or guarantor on your mortgage. This will give your application a big boost if you have bad credit.
See if you qualify for down payment assistance
There are many charities and programmes that help you to make your down payment or even boost it to help you compensate for your credit situation. Look out for people who are willing to help.
Boost your credit score
Look for ways to quickly boost your credit score such as joining the electoral register or closing down some unused credit cards to help you get the best deal on your bad credit mortgage.