So, it’s your dream to own a home, with a little garden and glass staircases? but you aren’t able to boast a formidable credit history? What many Britons don’t know is that, although far less straightforward, it is indeed possible to obtain a mortgage even if you have bad credit. Below is everything that you need to know. 

How to tell if you have bad credit 

Concerned that your credit record isn’t as squeaky clean as you hope it to be? The good news is that accessing your credit report is relatively easy to do. This should be your very first step when considering whether or not to invest in a house. In the UK, credit reference agencies (CRAs) are responsible for putting your credit report together. Currently, there are three main ones:

• Equifax 
• Experian
• TransUnion 

You can obtain a copy of your credit report from either one of these CRAs for free by requesting it online or by asking for a written copy. You are also within your rights to request your report from all three if you so wish. 

How to obtain a mortgage with bad credit 

If, after checking your credit report, you find that you indeed have bad credit, there are many avenues that you can explore when it comes to finding a way to finance a house. The easiest way to find a mortgage provider that will lend to you despite your bad credit is to use a comparison website, like The Money Hub, to compare deals. Unfortunately, not all lenders provide financing to people with bad credit, and some only do in certain circumstances. Most lenders will determine eligibility based on the severity of your credit history and the date upon which any relevant credit issue was registered. You are more likely to be considered for a mortgage if it has been a long period of time since the issue first came to the fore.

Keep in mind that if you have been declared bankrupt, you will only be able to apply for a mortgage once you have been discharged. This process usually takes about a year. 

Who can apply for a bad credit mortgage? 

Practically anyone. You may be eligible if you: 

• Don’t have a credit history at all
• Have an overall low credit score
• Have made late payments in the past
• Have missed mortgage payments in the past

People with other credit problems may also be considered. These credit problems may include:

• Defaults
• CCJs
• IVAs
• Debt management schemes
• Repossessions
• Bankruptcy
• Payday loans
• Multiple credit problems

Your eligibility will also depend on various other factors, including your current employment status, how much you currently earn, how much you are able to put down as a deposit, and your age. 

Other than that, consider how much you will need to spend on other things after purchasing the house. All items that would need to be replaced, new electrical, flooring, staircase refurbishment or roof repair etc.

What is the difference between a regular mortgage and a bad credit mortgage? 

In most instances, mortgage deals offered to people with bad credit will come with a higher interest rate attached. That is why it is so important to compare deals.

It doesn’t mean that all hope is lost if you have bad credit. There is still a good opportunity to own a home just as long as you do your homework and know where to look. Good luck!