Can You Buy a House with Bad Credit as a First-Time Buyer?

Yes, it’s possible to buy a home with bad credit. The specifics depend on the type of credit issue, when it was recorded on your file, and the amount involved. Speaking to a mortgage broker is essential—they can help assess your situation and recommend lenders likely to approve your application.

Can You Get a Mortgage with a CCJ, IVA, Default, Bankruptcy, or Payday Loans?

• CCJs and Defaults: Approval depends on the amount and date of registration. Satisfying the debt (paying it off) can improve your chances.
• IVA: You’ll need to have completed the IVA before applying.
• Bankruptcy: You may qualify for a mortgage once your bankruptcy has been discharged for 12 months or more.
• Payday Loans: These aren’t automatically considered bad credit, but some lenders may reject applications if payday loans were taken within the last 12 months. Others are more lenient—consult a broker for advice tailored to your situation.

Do First-Time Buyers Need a Credit Score?

You don’t need a specific score to get a mortgage, but lenders will want to see evidence of responsible borrowing and repayment history on your credit report. Being registered on the electoral roll and staying on top of repayments can improve your credit profile. If your score is naturally low due to limited credit history, working with a broker can help you find lenders open to your circumstances.

What’s the Best Mortgage Option for First-Time Buyers with Bad Credit?

A repayment mortgage is highly recommended. It ensures the loan balance reduces over time, as part of your monthly payment covers interest and part repays the principal. This structure helps you pay off the loan fully by the end of the term.

How Much Deposit Do You Need? How Much Can You Borrow?

• Deposit: A minimum deposit of 5% is typically required, but larger deposits (10% or more) can improve your chances and secure better rates. The severity and recency of your credit issues may impact the deposit amount.
• Borrowing Amount: Generally, lenders offer four to six times your annual income, depending on your financial commitments. Factors like car finance, credit cards, or childcare costs can affect affordability.

What’s the Process for Applying for a Mortgage with Bad Credit?

Start by speaking to a mortgage broker early in the process—don’t wait until you’ve found your dream home. A broker can review your credit report, assess your finances, and create a realistic plan. This ensures you’re prepared to apply when the time comes, avoiding any surprises or delays.

Steps to Improve Your Chances of Getting a Mortgage with Bad Credit

1. Get Your Credit Report: Review it for any defaults or issues, such as missed payments on mobile phone contracts. If errors are found, contact the provider to have them removed.
2. Tidy Up Finances: Avoid living in an overdraft and ensure you have surplus funds at the end of each month.
3. Save for a Deposit: A larger deposit gives you access to better mortgage deals.
4. Stay on Top of Payments: Consistently paying bills and debts will improve your credit score over time.