This calculator is an estimation of how much you could borrow. If you’re ready to take out a mortgage, speak to a Revolution brokers to see what options are available.
Finding a mortgage with bad credit can be challenging - especially if you are a first-time buyer.
A lot depends on your circumstances, so you aren't automatically ineligible for an outstanding mortgage just because you don't have a perfect credit score. Lenders look at things like:
Ultimately, a lender wants to know that your monthly income is sufficient to cover all of your other outgoings and the mortgage so that you won't fall into arrears.
The great news is that an experienced broker such as the Revolution team can always offer alternative lenders, specialist bad credit mortgages, or help applying for support schemes to ensure your purchase can go ahead.
Read on for more information about first-time buyer bad credit mortgages, or give us a ring to discuss your situation on 0330 304 3040.
Before the 2008 credit crunch, regulators didn't control affordability as tightly in the UK lending market.
Since then, lenders have had new rules to ensure they aren't lending irresponsibly to people who can't afford to keep up with the repayments.
This factor is why a lender will ask about your income, debt, and regular expenses - they don't care how many credit cards you have but need to verify that they can lend to you under their operating policies.
As many high street banks and mainstream lenders shy away from helping bad credit applicants get onto the property ladder, a considerable number of specialist lenders have filled the gap with products created specifically for bad credit applicants.
Therefore, you can get a mortgage with bad credit, even if it's your first home - but it's probably not going to be through your regular bank.
The tricky part when looking for bad credit lending is that it's almost impossible to know which lenders have a flexible policy and which will reject your application outright.
Applying to unsuitable lenders can cause no end of problems. If they run hard credit searches, these appear on your credit file and further exacerbate the situation.
There are lots of things you can do to make the process easier:
The best way to ensure you're getting the top mortgage offers available is to work with a whole-of-market independent broker, like the experienced team at Revolution.
We can advise on all aspects of your mortgage, including things like:
Give us a call or email the team at info@revolutionbrokers.co.uk if you'd like to run through any of these factors.
Mortgage rates vary considerably, so it's tough to give an average rate.
This element also depends on the type of first-time buyer mortgage you take out:
You might also consider a guarantor mortgage if you're struggling to find a home loan as a first-time buyer with bad credits.
Guarantors act as a security blanket and make a formal agreement to take over responsibility for the loan if you don't keep up with the repayments.
Another option is an offset mortgage, whereby your mortgage account is linked to your savings or current account. If you have savings, you only pay interest on the difference between what you own and owe to reduce your monthly outgoings.
A 5% deposit is usually the absolute minimum mortgage deposit you'll need - and if you can offer more, it'll put you in a much better position to find reasonable rates as a bad credit borrower.
However, you are eligible for several schemes as a first-time buyer that might make it easier to secure a mortgage even if you can only offer a 5% deposit.
Help to Buy offers an equity loan of 20% of the property price, provided you've got a 5% deposit to contribute.
That means you can offer the lender a 25% deposit, making your application much less risky and a better prospect for acceptance.
There are also options from Shared Ownership to mortgage guarantee schemes, so it is possible to get a first-time buyer a bad credit mortgage, provided you've got the right help in working out which initiative is best for you.
It would be best if you also considered the fees chargeable for setting up your first-time buyer mortgage along with interest rates.
Any extra work required to evaluate your credit report or look further into your financial stability can make it more expensive. A lender may levy additional fees or be reluctant to waive arrangement costs if they've had to work harder to approve the application.
Fees associated with a mortgage include:
Other expenses include insurance since a mortgage lender will often require proof of buildings insurance cover before finalising the mortgage offer.
Any mortgage applicant with bad credit isn't likely to find that their mortgage rates are as reasonable as a person with a clean credit record.
However, that doesn't mean you should accept high charges and unviable interest rates to move forward.
As we've explored, a larger deposit will improve the rates you're offered. This option is one of the most common ways to drive down your mortgage costs and offset the risk associated with a bad credit history.
You can borrow towards the deposit for your first home from family members. Therefore, if you're struggling to save enough to buy a home, you can top-up your savings in this way.
It's well worth checking the options with the Revolution team, as there are several acceptable ways to boost your deposit value, although not all lenders will accept all deposit sources.
There may also be tax implications with gifted deposits, so give us a call if you're considering this option, and we'll explain the pros and cons.
Revolution Brokers is always on hand to help if you need to find a first-time buyer mortgage lender but are worried about your eligibility due to bad credit issues.
You can visit our handy calculators as a first step to get a rough idea about how much you could borrow based on your annual income. However, please note that calculators use approximations and averages, so they'll never provide a fully detailed answer.
It's vital you can afford the repayments, particularly if you've run into credit problems in the past.
Therefore, it may be that we recommend looking at ways to reduce your mortgage costs, such as:
Not all mortgage lenders will accept bad credit applicants, so don't worry if one bank has turned you down. Likely, they cannot lend to any applicant with a specific credit issue, so it's usually possible to find an alternative lender who will be happy to proceed.
Many niche lenders offer broker-exclusives, so there's a good chance that there is a mortgage out there with much better rates than you'll find in an online rates table.
Please contact the team at 0330 304 3040 or email us at info@revolutionbrokers.co.uk for more information about any of the products or mortgages discussed in this content.
Our friendly teams will have a chat to understand your requirements and make tailored recommendations to help you secure the mortgage you need.
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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.
Revolution Brokers understands that mortgages can be complex and confusing!
Ask us any question you might have, and one of our skilled consultants will come back to you as quickly as possible.
