Mortgages for Bad Credit First-Time Buyer Applicants With Bankruptcy History
Bankruptcy is one of the more serious credit issues a first-time home buyer may need to try and address, but you may be able to proceed. In this case, you will almost certainly need a lender with mortgages first-time buyers specifically designed for adverse credit applicants.
A lot depends on when the bankruptcy was filed, the context, and whether your finances are now in good order – any lender will want to see a first-time buyer has a stable income, a good deposit, and the ability to keep pace with repayments.
Many of the best specialist first-time buyer lenders who will consider bankruptcy applicants do not advertise or deal directly with the public, so a broker is essential to access these more niche deals.
Getting a First-Time Buyer Mortgage With a CCJ
County Court Judgements or CCJs are another potentially serious credit problem for a first-time home buyer UK, and it remains advisable to consult an experienced first-time buyer broker to evaluate your best options.
In most situations, you’ll be able to apply for mortgages first-time buyers provided your CCJ has been repaid in full or satisfied. A first-time buyer with an outstanding CCJ will normally need to select their choice of lender very carefully, as some providers will not lend in these circumstances.
A first-time buyer lender will need to know when the CCJ was registered, whether you have had several CCJs in the past, if you have since repaid the debt, and whether you have any other credit problems that might affect your eligibility for a first-time home buyer mortgage.
Lenders will normally expect a higher deposit from a first-time buyer with adverse credit to offset their perceived risk.
Mortgages First-Time Buyers With Defaults on Their Credit Score
As a first-time home buyer with defaults on your credit report, it may be trickier to find the right first-time buyer mortgage than an applicant with a good credit score. Still, as long as you can comply with the lending criteria, there are suitable first-time home buyer mortgages.
Some lenders will disregard certain defaults, such as a default related to a mobile contract, but will have a different stance on a first-time buyer with a default against a secured loan.
Finding a First-Time Buyer Mortgage With an IVA
IVAs can signify a lack of money management skills, so some lenders will not lend to any first-time home buyer with an outstanding IVA. However, the point of this repayment agreement is to help you get your finances back under control, in which case you may be able to apply for a first-time buyer mortgage.
A first-time buyer with an IVA may wish to wait until the report has expired from their file after six years but can proceed with a mortgage working with an experienced broker who can recommend the right specialist lenders or products that are open to first-time home buyer applicants with bad credit.
Applying for a Mortgage for Bad Credit First-Time Buyer Applicants With Payday Loans
Payday loans may not necessarily indicate bad credit, but many lenders are reluctant to offer a first-time home buyer UK a mortgage if they have a history of payday loans, since they are associated with very short-term financing, which may be linked with poor money management.
Like every credit issue, your chances of securing a first-time buyer mortgage depend on your choice of lender since, while banks will commonly refuse to lend to anybody with a payday loan history, other providers are more flexible.
Niche first-time buyer lenders make decisions on a case-by-case basis, so they might look at how many payday loans you have used, to what value, and the last time you used short-term borrowing.
A first-time buyer might have one payday loan from five years ago, resulting in immediate rejection by a high-street bank that another lender won’t consider particularly problematic.
How to Apply for a Bad Credit First-Time Home Buyer Mortgage
Whenever we work with a first-time home buyer UK, we look at the circumstances as a whole, from the deposit available to the person’s income, debts, outgoings, credit history and the value of the property they wish to buy.
It may also make a difference if you are using one of the first-time buyer schemes. Although the Help to Buy first-time buyers scheme has now closed, there are several alternatives which we’ll look at shortly.
Lenders work through the same process, so it helps to understand what your application will look like as a first-time buyer with any form of adverse credit history.
Accessing your credit reports, correcting errors or updating your details is useful because it lessens the likelihood of a lender having queries or questions about elements of your first-time buyer mortgage application.
The next step is to work with a first-time buyer broker to pinpoint your requirements and match your borrowing needs to a suitable lender, considering their policies, attitude towards the type of bad credit you have, and the amount you need to borrow.
Deposit Requirements for a Bad Credit Applicant for Mortgages First-Time Buyers
A first-time home buyer UK will typically need at least a 5% deposit, and sometimes 10%, but you should be aware that if you have bad credit, a lender may ask for a higher down payment, sometimes up to as much as 20%.
Much depends on the lender you apply to, and if you don’t have a substantial deposit available, it is certainly worth speaking with a first-time home buyer broker to identify the appropriate lenders who won’t command a down payment above your means.
As we've mentioned, you might also be able to access one of the alternatives to the Help to Buy first-time buyers scheme as a way to purchase a property regardless of your credit score.
Shared Ownership for First-Time Buyer Mortgages
Shared Ownership is a good option for a first-time buyer with bad credit and a small deposit because you can purchase a proportion of the property rather than needing to save up a sizable down payment to offset the risk of having adverse credit.
You pay rent on the balance you do not own to the relevant housing association but can still qualify for first-time buyer mortgages on whatever share you are purchasing.
Guarantor Mortgages for a First-Time Home Buyer With Bad Credit
Another solution could be to apply for a first-time buyer guarantor mortgage, where a family member provides assurance that they will cover the repayments if you fall behind. You are still a first-time home buyer UK, but the lender has extra security if they feel your application is otherwise too high a risk.
Using Right to Buy as a Bad Credit First-Time Buyer
Finally, if you are a tenant in a council property, you may be eligible to use the Right to Buy first-time buyer scheme, where you purchase the property at a good discount, meaning a small deposit might make up a larger percentage down payment.
Professional Advice on Finding a Mortgage for Bad Credit First-Time Buyer Applicants
We recognise that the challenge of getting a first-time buyer mortgage is exacerbated if you have been turned down due to bad credit – and the good news is that we can normally recommend a lender who will consider your application.
If you'd like more information about any of the options included here or to discuss your first-time buyer mortgage requirements and credit position, please contact Revolution Finance Brokers at any time.
2023-05-09 
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