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How Does the Help to Buy Scheme Work for Bad Credit Applicants?

Help to Buy is one of the various schemes supporting buyers getting onto the property ladder – but can you use Help to Buy if you have a history of bad credit?

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

Almas Uddin2023-05-09
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What Is a Help-To-Buy Scheme And How It Can Help Bad Credit Applicants?

Help to Buy is a government scheme that helps first-time buyers purchase their first home. It offers an equity loan up to 20% of the property's value to add to a minimum 5% deposit.

Having a larger deposit means you can achieve better interest rates, apply to a broader pool of lenders, and find it easier to secure a mortgage at 75% Loan to Value.

These equity loans are interest-free for the first five years, after which time you need to either refinance the loan or start paying interest at 1.75% and increasing year on year.

However, if you have bad credit, can you apply to Help to Buy? And will a mortgage provider consider your application?

We'll cover these topics in this guide, but if you have further questions or need assistance with your mortgage application, give us a call on 0330 304 3040, or email the Revolution team at [email protected].

Can I Apply to Help to Buy with Bad Credit?

Yes, you can. Help to Buy has a few criteria as below, but it doesn't require a credit check or a minimum credit score. You must be:

  • Aged over 18.
  • Be resident in the UK.
  • Buying your first home.

The issue is that Help to Buy is the equity loan proportion of the transaction - you will still need to apply to a mortgage lender for the home loan, using your Help to Buy funds as a deposit.

Therefore, you need to consider which lenders will approve your mortgage application. A lot depends on what sort of bad credit issues you have and how long ago they occurred.

Fortunately, an independent broker can identify bad credit specialist lenders even in a more serious credit scoring situation - give us a call if this applies, and we'll recommend the mortgage providers most likely to approve your loan.

AboutAbout your mortgage
Single or joint mortgage?
What’s your yearly income?

Error: Yearly income income must be between £1 and £10,000,000.

Do you receive a regular bonus?

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about your mortgage

Based on your yearly income,
you may be able to borrow

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Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.

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Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.

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Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.

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Can I Get a Help to Buy Mortgage After Being Bankrupt?

Bankruptcy is one of the most severe credit issues to have on your file. Many banks and lenders will refuse a mortgage application if a bankruptcy charge has ever been registered on the file.

However, niche lenders specialise in helping bad credit applicants buy a home, so all is not lost!

How Does Adverse Credit Impact by Eligibility for a Help to Buy Mortgage?

As we've mentioned, a lender may be less compelled to approve a mortgage application if you have an adverse credit history.

Generally, you'll be allowed to borrow up to three or four times your annual income. Some lenders offer higher multiples but are unlikely to provide this if you have bad credit.

The below table illustrates how the income multiple will impact the maximum mortgage you can apply for, using an applicant with a £25,000 salary as an example:

Income multiple

Maximum mortgage value

Monthly cost over 25 years

Three x salary

£75,000

£356

Four x salary

£100,000

£474

Five x salary

£125,000

£593

Expert Help with Bad Credit Help to Buy Mortgages

Suppose you have bad credit and would like to use Help to Buy to purchase a property. In that case, you will benefit significantly from working with an independent broker who can craft an application to the lenders in the best position to approve your mortgage.

Give the mortgage advisors team a call on 0330 304 3040 for independent advice from a whole-of-market team. Alternatively, drop a message to [email protected] to arrange a good time to discuss.

Almas Uddin
Almas Uddin

Founder and Mortgage Advisor

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FCA disclaimer

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.

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