If you’re thinking about buying a home but have missed payments, defaults or a CCJ on your credit history, you might be wondering if getting a mortgage is still possible.
Bad credit doesn’t necessarily stop you from getting a mortgage, but it can affect which lenders will consider you, how much deposit you need and the rates available. Your income, existing debts and overall affordability will matter too.
If you’re looking to buy in Liverpool, there are a few things you can do before applying that could put you in a better position.
Can I Get a Mortgage in Liverpool with a Bad Credit History?
Yes, it can still be possible to get a mortgage if you have bad credit. A missed payment, default or CCJ doesn’t automatically mean every lender will turn you down.
What matters is the detail behind your credit history. A default from several years ago may be viewed differently from one registered recently, while lenders may also consider whether outstanding debts have since been settled.
Your credit history is only one part of the application. Lenders will also look at your income, deposit, existing debts, regular spending and whether the repayments are affordable.
How To Get A Mortgage With Bad Credit In Liverpool
If you’re planning to apply for a mortgage, it’s worth getting a clearer picture of your finances first. Here are some practical steps you can take.
1. Check Your Credit Report
Before speaking to lenders, check what they’re actually going to see.
Look at your credit reports with Experian, Equifax and TransUnion, as the information held by each can differ. Check for incorrect addresses, accounts you don’t recognise, payments recorded incorrectly or other information that doesn’t look right.
If you spot an error, contact the lender or credit reference agency and ask for it to be investigated. It’s better to deal with this before you start making mortgage applications.
2. Work Out What You Can Comfortably Afford
The amount you can borrow isn’t just based on your salary. Lenders will look at what comes in each month and what you already have going out.
Go through your regular spending, including loans, credit cards, car finance, childcare and other commitments. This will give you a more realistic idea of what mortgage repayments you could comfortably manage.
It’s also worth doing this before you start viewing properties, so you’re looking at homes within a realistic budget.
3. Save As Much Deposit As You Can
If you’re able to wait and build a larger deposit, it could open up more options.
For example, putting down £25,000 on a £250,000 property means you would need a 90% loan-to-value mortgage. Increasing that deposit to £50,000 would bring the LTV down to 80%.
You don’t necessarily need a large deposit to get a mortgage, but having more saved means you’re borrowing less of the property’s value and could give you access to a wider choice of deals.
4. Look At Your Existing Debts
If you already have credit cards, personal loans or car finance, the monthly repayments will usually be taken into account when a lender works out what you can afford.
Paying down existing borrowing where you realistically can may put you in a stronger financial position before applying. At the same time, try to avoid taking out unnecessary new credit in the run-up to a mortgage application.
If you’re struggling to manage existing debts, consider getting independent debt advice before taking on a mortgage.
5. Don’t Apply To Multiple Lenders At Once
If you’re worried about being rejected, it can be tempting to try several lenders. This isn’t necessarily the best approach.
Full mortgage applications can leave hard searches on your credit report, so find out which lenders are likely to consider your circumstances before applying.
An Agreement in Principle can give you an initial indication of what you might be able to borrow. If you’re declined, find out why before immediately trying another lender.
6. Speak To A Mortgage Broker
Mortgage criteria can vary considerably between lenders, particularly when bad credit is involved. A broker can look at what happened, how long ago it was, your deposit, income and wider finances before looking for lenders that may consider you.
A Liverpool mortgage broker can help you explore lenders based on your circumstances rather than simply applying and hoping for the best. The team works with a wide panel of lenders and can support borrowers with adverse credit, including those with missed payments, defaults and CCJs.
Finding The Right Mortgage When You Have Bad Credit
Having bad credit doesn’t necessarily mean giving up on buying a home. Your options will depend on what appears on your credit history, how recently it happened and what the rest of your finances look like today.
Before applying, check your credit reports, look at what you can realistically afford and avoid sending applications to multiple lenders without knowing whether you fit their criteria.
If you’re unsure where you stand, speak to a mortgage broker about your situation. They can look at the full picture and help you understand which mortgage options may be available to you.
