5 bad credit mortgage myths busted

mortgage myths

Research suggests property-focused Brits see owning a home as the pinnacle of success, with 41% saying that being declined a mortgage is an embarrassing secret that means they’d failed in life. Additionally, a massive 70% of potential applicants don’t approach lenders due to fears that their financial circumstances would mean they are automatically rejected.

This means there are thousands of potential homeowners unnecessarily missing out on their dream home.

Here are 5 bad credit mortgage myths that shouldn’t stop you applying for a mortgage…

First time buyers can’t get a mortgage with a history of bad credit

Getting a mortgage with a clean credit history can seem like a struggle so what chance does anyone with a poor credit history have?

The good news is there are lenders out there who will offer a mortgage to buyers with credit issues, don’t assume there aren’t.

One tip is to look beyond the high street and either research lesser known (but equally as safe and credible) brands or go to a specialist mortgage broker who has whole of market knowledge.

You can’t remortgage if you have bad credit

The fact of the matter is, yes, bad credit remortgages can be harder to arrange, but not impossible.  

Lenders care about adverse credit history because if a borrower has had credit problems in the past, then they are more likely to have them in the future.

However, if you meet certain criteria, there are lenders who will consider your application, even if you have bad credit.

It can takes years to get a mortgage after a CCJ , default or IVA

The time between having a CCJ, IVA or default and being able to get a mortgage varies between lenders, there is no set rule. There are also other key factors that impact whether you’ll be eligible for a mortgage. These include:

  • Amount of money owed
  • How much deposit you currently have
  • The number of issues you have faced
  • Whether it has been satisfied or not
  • The mortgage type you are looking for

I’m wasting my time with a mortgage broker

A mortgage broker could be the difference between getting a mortgage or not. Not every broker has the same market knowledge or goes to the same lenders, so it is important you choose the right one who specialises in cases like yours.

Bad credit will follow me around forever

Your credit score changes over time, and there are ways you can improve your score to increase the chance of getting a mortgage.

Common tips include:

  • Sign-up to a free credit score monitoring service
  • Pay all bills on time
  • Pay your credit card each month
  • Try to reduce how much credit you apply for
  • Register on the electoral roll

The good news

The good news is that the market is vast and there are deals out there for all kinds of borrowers, from those with clean credit to customers whose record is less than perfect.

It doesn’t matter if a lender has turned you away in the past, with the right advice, it may be possible for you to obtain a mortgage loan even with a history of bad credit.

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