Can I Get A Mortgage With Bad Credit?

Published: 26/04/2018

A question our property experts here at GWlegal hear often is: I have a bad credit history, can I still buy a property?

Indeed, it is a commonly held belief that those with less than favourable credit histories can never own a home or their home and will be stuck renting forever, as they will never be granted a mortgage.

This is actually not true.

People with a bad credit history can too become homeowners. There is no reason to settle for rental properties for the rest of your life.

It is true however, that these type of property buyers will need to work a little harder to fulfil their dream of home ownership (and to obtain a good mortgage).

So what practical step can an individual with poorer credit ratings take? Our property solicitors explain…

There are lenders who specifically grant mortgages to clients with poor credit ratings. This is always an option. However, the terms of your mortgage may not be great. You might be stuck with higher interest rates and bigger monthly payments.

As such, here at GW we would advise clients dreaming of home ownership to first work on improving their credit score. Remember - a bad credit rating is not forever. Credit scores change over time. If a lender won’t grant you a plan now, adapt, and re-apply again. Don’t caught into thinking there is a big rush. You may not be a homeowner right now, but you can be in the future.

Ways to improve your credit rating include:

1. Reduce the amount of debt you owe. Stop using your credit cards. Check how much you owe on every account you have and come up with an achievable payment plan. Pay off the highest interest cards first, while maintaining minimal payments on your other accounts.
2. Check your credit report. Request a copy of your credit report. Review it very closely for any mistakes. You might be surprised!
3. Set up payment reminders. One of the biggest factors towards a better credit score is making credit payments on time. Set up a calendar to remind yourself or enact auto payments. Work on your money management!
4. Pay everything else on time. Bill payments must never be late!
5. In time, reestablish your credit history by opening new accounts responsibly and paying them off in time.
6. Save, save, save! The more money you have, the better, so you don’t get in any more financial strife (e.g. through use of credit cards) going forward. Also, the bigger deposit you have for a home, the more options you will have. You may also qualify for a Government-assisted scheme such as Right To Buy or ISA. For more tips on how to save money and get out of debt, read our article how one young mum went from debt owner to homeowner

Other factors that can help those with bad credit scores can include:

• Having a good explanation. Sometimes if you explain how you got into your financial trouble and what has happened since to your bank, they may be more understanding.
• Your partner’s score. If you partner has a better credit score than you, their history will be taken into account when granting you a mortgage too. This could be a saving grace! Another option is to consider co-owning a property with a Declaration of Trust. Read more here if you own a property with someone else you may need a declaration of trust
• Enlisting the expertise of an experienced financial advisor, who can help you sort out your situation!

How Can I Ensure My Conveyancing Goes As Smoothly As Possible?

Choosing an experienced, reputable conveyancer is your best bet!

GWlegal is home to some of the best property solicitors in the country. Every day we help buyers and sellers, from first time buyers to seasoned landlords, complete all types of property transactions.

The great thing about choosing GWlegal though, is that you get a solicitors’ firm with a local approach. Many of our Liverpool lawyers and support staff have worked at the firm for as long as 30 years, so we must be doing something right!

GWlegal also offers:

• Fixed costs (no hidden fees)
• 24/7 access to your case and any milestones on our app
• Milestone updates are now emailed/texted straight to you and your mortgage broker
• Regular updates by phone and/or in writing from our friendly staff
• The peace of mind that comes with choosing a solicitor with over 30 years experience

Do you have any Conveyancing questions?

Our property team has put together an explanation to many of the questions asked during the residential property conveyancing process. You can read our FAQs here.

Who are GWlegal?

If you have a legal matter you wish to discuss don’t hesitate to get in touch. You can call us on 0345 373 3737 email us hello@gw.legal with your question.

Who are GWlegal? We’re a national firm with local values.

Do you want a quote for our property services?

Content correct at time of publication.