How Does the Help to Buy Scheme Work for 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 info@revolutionbrokers.co.uk.

The following topics are covered below:

Can I Apply to Help to Buy with Bad Credit?

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

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

Expert Help with Bad Credit Help to Buy Mortgages

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.

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!

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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 Revolution Finance Brokers team a call on 0330 304 3040 for independent advice from a whole-of-market team. Alternatively, drop a message to info@revolutionbrokers.co.uk to arrange a good time to discuss.