Bad credit and mortgages

Bad credit, or credit impaired, is used to describe someone with severe adverse repayment information on their credit report, such as defaults, county court judgments, or bankruptcies.


These are the more severe scenarios that lenders will look for to decide whether they would lend to you or not. We’ve asked Katie Holland, Mortgage and Protection Advisor to answer some frequently asked questions about securing a mortgage if you have a history of bad credit.


Let’s hear more from Katie…


Having bad credit doesn’t always mean that you won’t be able to obtain a mortgage. It does vary depending on your credit rating- this is because there is a fine line between ‘fair’ and ‘bad’ credit scores.


There are lenders out there who will offer mortgages that have been specifically designed for people who have bad credit, however these can provide much higher interest rates and fees.


Below I’ve outlined questions we are regularly asked at Signature, to be able to obtain a mortgage whilst having a history of bad credit.


Can I get a mortgage if I have been issued a CCJ (County Court Judgement)?


It is still possible to get a mortgage if you have been issued a CCJ. It will however depend on how much it was for, how long ago it was and if it was satisfied or unsatisfied.


Can I get a mortgage with bad credit?


Yes! This depends on how severe this is but there are some lenders that do not go off credit score. We just need to know why- it can then open up more specialist lenders that consequent in higher rates and fees for example, but it’s not always impossible.


Severe cases


More severe cases are consequent on lower loan to values, which means higher deposits are to be put down.


Here’s an example:


I was issued with a CCJ from a car parking fine which went to my old address, I have never missed a payment on any form of bill and can evidence this by obtaining a copy of my credit report. I have called and made the payment as soon as I found out, but the CCJ is showing on my credit report that it was issued 3 months’ ago and unsatisfied. Can I get a mortgage?


This is an example where; an applicant clearly was not aware this has happened. Some lenders are happy to ignore this scenario, but you will need to evident that the CCJ has been repaid in full. Usually, in a situation like this generous interest rates and higher LTVs (Loan to Value) are available.


If you do have a severe case of bad credit- this could include regular missed payments across multiple credit commitments, CCJ’s, Bankruptcies and IVA’s then here are some pointers, you’ll need to be aware of:


  • Higher lender fees
  • A higher deposit will be required
  • Restricted loan to value
  • High interest rates
  • Limited lending panel

We are here to help


At Signature we understand that everyone’s situation is different. We will work with you to provide a tailored solution to help obtain a mortgage that suits you.


If you are looking to secure a mortgage but have a history of bad credit and are unsure of your eligibility, we are here to help. To speak to one of our friendly advisors, get in touch here.