Example specialist approach: Aldermore<\/h3>
Aldermore is a self-proclaimed “complex credit” specialist. Their philosophy is that a previous financial hiccup shouldn’t automatically disqualify you from homeownership. They are known for considering applicants on Debt Management Plans (DMPs) or those with previous CCJs and missed loan payments.<\/p>
However, their flexibility comes with specific tiers based on the recency of your credit issues:<\/p>
- Tier 1 (strictest requirements with highest borrowing power).<\/strong> If you\u2019ve got a low deposit and want to get a 95% LTV mortgage (5% deposit), you must have had no CCJs, defaults, or mortgage arrears in the last 36 months.<\/li>
- Tier 2 and 3 (more flexible requirements with lower borrowing power).<\/strong> These tiers are more lenient about your past; they\u2019ll consider you even if you\u2019ve had CCJs or defaults as recently as 6 months ago. However, because the perceived risk is higher, they restrict how much you can borrow, so you may have a maximum LTV of 75% or 80%, meaning you\u2019d need a deposit of 20% to 25%.<\/li><\/ul><\/div><\/article>
Example high street approach: HSBC<\/h3>
In contrast, big banks like HSBC generally prefer “clean” applications. The lending criteria states that it will automatically reject an applicant who: <\/p>
- Within the last 2 years has owed overdue payments, in an amount equivalent to 3 months\u2019 payments, on a mortgage or other loan (whether secured or unsecured).<\/li>
- Has had one or more county court judgments (CCJs), with a total value greater than \u00a3500, within the last 3 years.<\/li>
- Has been subject to an individual voluntary arrangement (IVA) or bankruptcy order which was in force at any time within the last 3 years.<\/li><\/ul>
It also states that for light adverse credit:<\/p>
- Applicants who have previously missed payments on their credit commitments will usually be declined. Individual cases may be considered under exceptional circumstances.<\/li><\/ul>
This implies that missed payments are the exception rather than the rule. If you have a recent bankruptcy or multiple CCJs, a high-street bank or mainstream lender like HSBC is highly likely to decline the application automatically due to their rigid scoring criteria for applications.<\/p><\/div><\/article>
So as you can see, different mortgage providers have quite different policies. But you don’t have to go researching them all \u2013 a decent broker like Habito<\/a> (with both high-street and specialist lenders in their panel) can do that for you, without you incurring a fee. <\/p>
Bottom line<\/h3>
Finder statistics<\/a> reveal that the average first-time buyer deposit in the UK is \u00a361,090, approximately 20% of the average house price for a first-time buyer, which is \u00a3311,034. If you\u2019ve got bad credit, you may find you need a deposit around this size – depending on the age and severity of your credit issues (and the lender you approach). <\/p>
For those of you who happen to have bad credit and a low deposit, it can still be possible to get a mortgage, particularly if your issue is related to something less serious like a missed payment or a low credit score – but your pool of lenders will be smaller.<\/p>
Navigating the bad credit lending landscape without expert support can be a nightmare. So we\u2019d encourage you to have a discussion with a mortgage broker or advisor platform to see where you stand and what the best next steps are for you to get a first-time buyer mortgage with bad credit.<\/p>
Frequently asked questions<\/h3>
Can a first-time buyer get a mortgage with no deposit?<\/h4>
It can be possible, but there are only a small number of options out there. For example, Skipton Building Society offers a “Track Record Mortgage” aimed at people currently renting where no deposit for first-time buyers is required. However, there are specific qualifying criteria to meet. Another option is April\u2019s “No Deposit” mortgage.<\/p>
However, Skipton specifies that you have no missed payments on debts or credit commitments in the last 6 months and April\u2019s criteria states you must have a clean credit history. So, you can\u2019t have bad credit and get a no deposit mortgage.<\/p><\/div><\/div><\/div>
Can you get a UK mortgage with bad credit, missed payments, or defaults?<\/h4>
Absolutely. While high-street banks might be quick to say no, having a less-than-perfect credit history doesn’t automatically lock you out of the market. <\/p>
Many lenders are willing to look past older minor bad credit issues, especially if you can show a recent track record of improved financial behavior. <\/p>
The key is to find bad credit specialist lenders who use manual underwriting over automated algorithms. Working with a whole-of-market broker such as Habito<\/a> is the easiest way to narrow down your best lending options.<\/p><\/div><\/div><\/div>
Which mortgage broker should you use if you have credit issues?<\/h4>
If your financial history is complex, you need a broker that looks beyond the standard mainstream lenders and high street banks. You should look for a whole-of-market broker like Habito<\/a> or L&C Mortgages<\/a> that has access to both mainstream and specialist lenders (like Aldermore or Pepper Money<\/a>). <\/p>
Many mortgage broker platforms offer free online advice and a digital-first approach, so you can explore your eligibility in a low-pressure environment without the fear of an unnecessary decline on your record. <\/p><\/div><\/div><\/div>
What is the easiest way for a first-time buyer to secure a mortgage?<\/h4>
Preparation is the best shortcut. The easiest route is to use a broker that simplifies complex criteria and handles the heavy lifting for you. A digital broker can help you calculate your affordability, explain those confusing lender requirements, and manage the entire application process from your phone.<\/p><\/div><\/div><\/div>
Can a broker help first-time buyers find a low-deposit mortgage?<\/h4>
Yes. Whether you\u2019ve saved a 5% deposit or have more put away, an experienced mortgage broker service can help match you with the right lender because these experts can quickly identify which lender is currently offering the most competitive low-deposit deals for your specific financial profile.<\/p><\/div><\/div><\/div>
Can I get a mortgage with a CCJ?<\/h4>
Yes, but the age of the CCJ is the most important factor. If the CCJ was registered over 3 years ago and has been satisfied (paid off), you may still qualify for competitive rates with some lenders. If it happened in the last 12 months, you\u2019ll likely need a specialist lender and a larger deposit.<\/p><\/div><\/div><\/div>
Will a bad credit mortgage cost more?<\/h4>
Generally, yes. Lenders view bad credit as a higher risk, which they offset by charging higher interest rates and sometimes higher arrangement fees. <\/p>
However, one strategy borrowers use is to go for a 2-year fixed rate, use that time to rebuild their credit or wait for adverse issues to age, and then remortgage onto a cheaper rate once their credit profile has improved.<\/p><\/div><\/div><\/div>
How much deposit do I need if I have bad credit?<\/h4>
While 5% deposit (95% LTV) mortgages exist for those with minor credit issues (like a single missed payment), most specialist lenders will ask for a deposit of at least 10% to 15%. The worse and more recent your credit issues are, the higher the deposit lenders will likely want.<\/p><\/div><\/div><\/div>
How long does bad credit stay on my file?<\/h4>
Most adverse credit issues stay on your credit file for six years. The good news is that their impact fades over time. For example, a default from 5 years ago is much less damaging than one from 5 months ago.<\/p><\/div><\/div><\/div>
How do I know which mortgage lenders will accept me?<\/h4>
There\u2019s no surefire way of knowing until you submit your application. It\u2019s recommended that you seek guidance from a mortgage advisor, who will have the knowledge to point you towards the lenders most likely to approve your application.<\/p><\/div><\/div><\/div><\/div>
Sources<\/h3>\n
<\/div>\n
- Applicants who have previously missed payments on their credit commitments will usually be declined. Individual cases may be considered under exceptional circumstances.<\/li><\/ul>
- Tier 2 and 3 (more flexible requirements with lower borrowing power).<\/strong> These tiers are more lenient about your past; they\u2019ll consider you even if you\u2019ve had CCJs or defaults as recently as 6 months ago. However, because the perceived risk is higher, they restrict how much you can borrow, so you may have a maximum LTV of 75% or 80%, meaning you\u2019d need a deposit of 20% to 25%.<\/li><\/ul><\/div><\/article>