The cost of living crisis has made staying within their means even harder for a lot of people. You might find yourself with minor credit problems if you’ve had something like late credit card payment or late phone bill. If you’re looking to get a mortgage but now have adverse credit, we may be able to help. Our award-winning broker team specialise in increasing buyers’ affordability so you can get on the ladder. To get started, create a Tembo plan today for free, or find out more about what options are available below.
There are different types of late payments or defaults which makes you have ‘bad’ credit. These includes:
Having adverse credit means you will be charged a higher than average interest rate for your mortgage, or you could be refused by some lenders altogether. Don’t panic if you end up in this situation.
Our team of mortgage experts can advise you on the best solution, and what mortgage options may still be available to you, depending on how bad your credit score is.
No matter the size of house deposit you have, or the type of property you wish to buy, if you have a poor credit rating it’s often harder to get a mortgage. If you’ve missed small payments in the past such as a phone bill, we may be able to help you get a mortgage. To find out what you could afford, create a plan with us today for free. If you've got an active IVA or DMP, have declared bankruptcy or had your home repossessed in the past, there will be limited mortgage options available to you. While we still may be able to help, we recommend you speak to a specialist adverse credit mortgage lender.
If you’ve had a county court judgement (CCJ) in the past for a nominal amount, we might still be able to help you get a mortgage. However, if your CCJ has been for a larger amount, we'd recommend you talk to a mortgage broker who specialises in adverse credit.
Even if you have adverse credit, there are still mortgage options that can help you get on the ladder, although these will be more limited and you may not get access to the most favourable mortgage rates. The best way to get a mortgage when you have poor credit is to use a reputable mortgage broker who has the expertise to look into all the options for you. Our expert team has helped thousands of first time buyers and home movers boost their mortgage affordability. Working with over 100 lenders, we have access to specialist mortgage products designed to help you afford more. We are also directly authorised to look beyond our vast panel of lenders if there are other products you can apply for. To find out what you could be eligible for, create a plan with us or learn more about the ways you could boost your borrowing power below.
Boost how much you can borrow for a mortgage with help from family or friends. Whether you need a guarantor on a mortgage, or are looking to get a joint mortgage together, Tembo can help. Create a free plan with us today to see what you can afford, and get a personalised recommendation for how to boost your buying power at the end. Or, keep reading to find out some of the ways you can increase your borrowing potential.
If your salary is too low to get a mortgage on your own, an Income Boost could be the answer. Also called a Joint Borrower Sole Proprietor mortgage, an Income Boost is where you add a friend or family member’s earnings to your mortgage application. With a larger combined income, you can borrow more, so you can get on the ladder sooner or afford a larger property. You’ll still be the sole owner, but as a joint borrower your loved one will be jointly liable for the repayments. So if you miss a monthly payment, they will be required to step in.
If you have bad credit, depending on the severity the lender may want you to put down a larger house deposit. If you have a low house deposit, or are struggling to save, a Deposit Boost may help. It works by a friend or relative unlocking money from their own home through a small mortgage. This money is then gifted to you, either to top up your own savings or to be used as your entire house deposit. With a larger house deposit, you will be able to afford more, as well as getting access to better mortgage interest rates which can be useful when you are less likely to get favourable rates with adverse credit.
If you have a loved one who wants to help you get your own home and has cash savings, they could use a springboard mortgage, also called a Family Guarantor mortgage. Your family member will deposit 10% of the property’s value in a special savings account for a set term. At the end of the period, your relatives will get their savings back plus interest, as long as you keep up with your mortgage repayments.
Buying a home with up to five relatives or friends as joint owners is a great way to increase how much you can afford, especially if your bad credit is limiting how much you can borrow. This is often called tenants in common, but we call it Dynamic Home Ownership.
Each owner will hold individual equity in the property, and each owner’s share is tracked separately. So you can all benefit from increased borrowing capacity, and any potential property value gains over time, while keeping it clear and fair who contributed what.
If you don’t have family who can support you getting on the ladder, or want to buy by yourself, there may still be ways you can get a mortgage with poor credit. To find out what mortgage schemes you could be eligible for, create a free plan to get a personalised recommendation including indicative monthly payments and interest rates.
Similar to the old Government’s Help To Buy scheme, a private equity loan provides you with the additional capital you need. In fact, you could boost your budget by up to £150,000. It works by topping up your house deposit with a second charge mortgage secured against your new home, so you can put down a larger down payment. In return, the lender will take a stake in the property, so any profit or loss in property value will also be shared with the lender.
If you’re finding it hard to put money aside for a house fund, or afford the monthly repayments to buy a home, Shared Ownership could be the answer. Instead of getting a mortgage on the full property value, you buy a share in the home, normally between 25-75% of the market value, and pay rent on the rest. Over time, you can “staircase” your way to full ownership, buying more of the home in regular instalments or as you can afford it.
If you work in a professional job, such as a doctor or solicitor, or earn over a certain amount, you may be eligible for a higher lending scheme. This allows you to borrow a higher multiple of your salary. Most mortgage lenders will lend buyers 4-4.5 times their salary for a home, but with a higher lending scheme you could get up to 5.5 times your earnings. To find out if you could qualify for one of these schemes, create a free Tembo plan.
- Kirsty White, Mortgage Lead
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