Bad credit and mortgages

Helping you unlock your options as a homeowner.

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Your credit history may show missed or late payments, court action and other markers. If you have a bad credit record it can make it harder to get a mortgage deal you can afford.

We may be able to help unlock your options even if you have:

A bad credit history
Debt

We will look at your budget and options in an advice session.

Worried about money and your mortgage?

Maybe it is a strain to keep on top of monthly spending. Or you don't know what to do when your fixed rate mortgage ends.

Together, we can look at your situation and unlock your options.

Read our homeowner guides.

Can I get a mortgage with bad credit?

Yes. But it may not be the right thing.

Lenders will probably:

Want a larger deposit
Want higher interest rates

'Specialist lenders' specialise in mortgage products for people with bad credit scores. These products include:

Bad credit mortgages
Adverse credit mortgages
Sub-prime mortgages

These mortgages may not be affordable.

To cover the lenders' risk, they could:

Increase interest rates
Increase monthly payments

IMPORTANT Always make sure you can really afford everything in the mortgage offer.

Can you afford a mortgage?

You need to understand:

The monthly repayment amount
Any fees, including to set up or change the deal
The term of the loan
How interest rate changes can impact you

How does interest affect your mortgage?

A normal 'capital repayment mortgage' has monthly payments.

These payments cover:

The interest charged
Paying off some of the capital

The 'capital' is the starting amount you borrowed
Your lender works this out

As the capital reduces, the amount of interest also reduces. This means:

More of your payment goes towards capital
You pay off what you owe off faster

Let's say you pay £1,000 a month:

At first

£850 could go towards the interest
£150 to the capital

Then, as the mortgage gets smaller

£350 could go to the interest
£650 to capital

But if interest rates change, your monthly payments increase.

So, let's say:

You borrow £100,000
To pay back over 20 years
At an interest rate of 2%
Your payments are £506/month

If the interest goes up to 6%:

Your payments are now £660 a month

Read more about mortgage interest rates here.

Check the mortgage deal against your monthly budget

Build a monthly budget to see:

How much you have coming in
How much you need to spend each month

This helps you see what you can really afford.

Read our guide to making a budget.

Can I get a mortgage if I have a debt solution?

It depends on the debt solution.

They work in different ways
They give lenders different information

Weigh up how a debt solution can affect your mortgage before going ahead.

Other ways to pay off your debts may be better.

Get free and impartial debt advice to be sure.

Find out more about mortgages and debt solutions.

Can I improve my credit score to get a mortgage?

Each lender has different rules for using credit records.

The best answer is to:

Pay your bills on time
Use credit sensibly
Always keep to payment agreements

You can build up your credit score by:

Opening a bank account
Taking out a credit card and making sure you pay this off in full every month
Getting a mobile phone contract and keeping up with payments
Being on the electoral roll
Making sure all the information on your record is correct

Can I remortgage with bad credit?

You may be looking to remortgage if:

Your mortgage term is ending
You want a better deal
Interest rates are changing
You need to pay for an expense
You need to as part of your IVA or bankruptcy

There are a range of options on the market, but every lender has different rules.