5 Tips for Securing a Mortgage with Less-than-Perfect Credit

Securing a mortgage with less-than-perfect credit might feel challenging, but it’s far from impossible. There are options available, even if your credit score isn’t ideal. Whether you're a first-time buyer or planning to move, this guide will provide you with practical tips to help you confidently pursue a mortgage. Keep reading to discover how to achieve your homeownership goals, even with less-than-perfect credit.

Tip 1 – Check Your Credit Report

Are you looking to secure a mortgage but think you have a less than perfect credit record that is holding you back? Your first step is to obtain your full credit report. You can easily do this online from the credit agencies, as follows:

Experian – offer a 30 day free trial but will charge a monthly fee thereafter.

Equifax - Use ClearScore for free access to your Equifax report.

TransUnion - Credit Karma gives you free access to your TransUnion report.

Want to see all 3 in one place? Check My File will do this. (a monthly fee applies after a 30-day free trial)

If you're just starting out and not in a rush to buy, it's essential to take steps to improve your credit score. Check out How to Improve My Credit Score for some additional top tips.

Tip 2 – Save a Deposit

Saving a deposit is a crucial step in buying your first home. Aim to save at least 5% of the property value, but the more you save, the better your mortgage options will be, particularly if you have a less than perfect credit record.

There are several ways to speed up your deposit savings. Consider opening a government-backed bank account like a Lifetime ISA, which will give you a 25% bonus towards your first home purchase. You can also boost your deposit with loans or gifts from family members. Cutting back on unnecessary expenses like dining out, gym memberships, and vacations can help you save even faster. For more information on mortgage deposits, check out our article which is dedicated to mortgage deposits.

Tip 3 - A Mortgage Broker Can Help If You Have A Less Than Perfect Credit

Skip the hassle and approach a reputable mortgage broker. Here's why it's worth considering:

Evaluate your options quickly: A broker can help you determine if you qualify for the best rates with high street lenders. If however you are suffering with a poor credit record, they will have access to a network of 'Specialist Lenders' to find you the best rate. They can also give you an accurate estimate of how much you can borrow.

Support from a single point of contact: A Mortgage Broker will guide you through the entire process and provide support whenever you need it.

Improve your chances in the future: Even if you can't secure a mortgage now, a broker can give you guidance around your next steps in order to increase your chances in the future.

Tip 4 – Pay off some debts

Lenders prefer to see that you have resolved your bad credit, as it shows that you are now stable financially and ready for new loans. This can lead to more options from lenders and access to better interest rates. It also reduces the financial obligations that brokers consider when assessing your borrowing power, potentially allowing you to secure a larger mortgage.

While it may not always be possible to fully clear your debts, mortgage brokers can help and offer alternative options. However, this might require you to increase your deposit or accept a higher interest rate.

Tip 5 – Don’t rush!

If you're eager to buy your first home or upgrade to a larger one, it's completely understandable. But if you have the luxury of time and it's not urgent, time can be very beneficial. Here's how:

1. It gives you the opportunity to save more for your deposit, which will greatly benefit you in the long run.

2. You can use this time to pay off any outstanding debts, especially if you have defaults or county court judgments.

3. By waiting, you can work on improving your credit score, which will help you secure the best interest rate when the time comes.

In conclusion, purchasing a home is a significant milestone in anyone's life, and having less-than-perfect credit should not be a deterrent. With the tips we have discussed, such as regularly checking your credit report, saving for a deposit, seeking advice from a mortgage broker, paying off debts, and taking your time with the process, you can still secure a mortgage and make your dream of owning a home a reality.

Don't let your credit score hold you back from achieving homeownership. Our team of experts are here to assist you every step of the way. So why wait? Take action and........

for further assistance in securing your dream home. With your determination and our expertise, we’ll help you take the next step towards making it a reality.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Published by Beechwood Mortgages Ref: 219335 with review and approval from Stonebridge Mortgage Solutions Limited who is authorised and regulated by the Financial Conduct Authority Ref: 454811.