Joint Mortgage Bad Credit
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Joint Mortgage Bad Credit
Simon Deeming explains how a joint mortgage works if you have bad credit.
Can you get a joint mortgage if both or one applicant has bad credit?
Yes, it’s possible to get a mortgage if you – or whoever you’re buying with – has bad credit. As with all borrowing, lenders will assess your ability to make payments on the loan, and having bad credit might affect how many mortgages are available to you. But bad credit alone doesn’t mean you can’t borrow at all. We should be able to find you something.
What types of bad credit affect a joint mortgage application?
Typical examples are County Court Judgements (CCJ), Individual Voluntary Arrangements (IVAs), defaults, debt management plans or bankruptcy. Late or missed payments are also classed as bad credit.
All these credit problems would be recorded on your file. When you apply for a mortgage, typically a credit check or credit score is done. Lenders look at your past history to assess your ability to manage debt.
Credit issues can affect which lenders are in the market to lend you money, and how much you therefore pay for that borrowing.
IVAs, CCjs, bankruptcy and debt management plans are considered to be fairly significant credit problems, while late payments are slightly less bad. Missing a council tax payment is often worse than a mobile phone bill, which would probably be seen as quite light.
Each lender sees things differently. Some treat all bad credit the same, while others might be more lenient around a missed utility bill, as long as it’s back up to speed now. Being over your limit on credit cards can also have an affect on your file.
Are there specific lenders who deal with joint mortgages with bad credit?
Yes – some lenders make a virtue out of that and it’s the market they look for. Also, some mainstream lenders may have more leeway on applicants with bad credit if it’s just a blip.
The number of providers reduces with bad credit, and the mortgage cost is likely to be higher. But there are definitely options out there – and that’s our job, to help find the right one for your circumstances.
Does being married make a difference when applying for a joint mortgage with bad credit?
No, it won’t make a difference. There will obviously be an impact if only one of you has bad credit – unless you were planning to apply for a mortgage in the single name of the person with a good credit file.
But some lenders won’t allow you to leave your spouse’s name off the mortgage, in which case a single application wouldn’t be possible. If you both had to apply, the bad credit could obviously cause issues. Again, we’d look at the best situation for you at the time.
Can I still get a joint mortgage if I have had previous bankruptcy or foreclosure?
It is possible to get a mortgage once you have been discharged from bankruptcy after 12 months. There are even some borrowing options with specialist lenders from around three months after discharge from the bankruptcy. You’ll be eligible for a much wider range of deals three years after discharge.
Speak To an Expert
What if I’ve been declined for a mortgage with bad credit previously?
You will still be able to borrow in the future. Not all advisors have the same expertise or experience in finding a deal for clients with credit problems, so it’s worth getting a second opinion from a multi-award winning broker like us.
We’ve got over 100 years’ experience in the team, and we all collaborate using our extensive lender contacts. We chat to them, narrow down the options and come up with the right solution for all the clients we support.
It could be that when your application was declined, the products available weren’t as wide ranging as they are today. A lot of borrowers come to us thinking that because they’ve been declined once upon a time, they’ll never get a mortgage. But the market changes constantly – everything’s subject to change, including from a price perspective.
The appetite of each lender changes for borrowers with poor credit, so their lending criteria once upon a time could be very different to what it is now.
There might be many more options for you now, so if you’ve been affected by bad credit, don’t rule yourself out. It’s worth having a chat with us. We don’t charge a fee for an initial conversation, and we’ll go over your specific circumstances and what you’re looking to do. We’ll do all we can to find the right solution for you.
Even if we can’t source something immediately, we can give you guidance and tips on how to get in a good position for a mortgage in the future.
What if I’m a First Time Buyer and have bad credit? Will this affect me getting a joint mortgage?
No, it won’t have a huge impact. As a First Time Buyer, naturally, you’ve not had any mortgage payments to miss, so you can’t have any on your file. That’s a good thing.
You may qualify for government-funded First Time Buyer schemes, which could help boost your deposit. Outside of that, you’ll be treated like any other borrower and your application will just be assessed on the severity of your bad credit.
Do we need a larger deposit for a joint mortgage with bad credit?
Yes. Lenders offering mortgages to clients with bad credit usually like borrowers to have a larger deposit. We generally see those deposits starting at 15% of the property price. Having said that, some lenders will allow borrowers to get a mortgage with poor credit with a 10% deposit.
What is the minimum credit score required for a joint mortgage with bad credit?
We don’t normally see lenders specifying a particular credit score in their criteria. There’s no quoted number that borrowers need to achieve.
It’s more that a client’s credit history will be reviewed and assessed from a risk perspective. They’re looking for missed payments or credit blips, how recent those problems are, and also the size and type of credit issue.
That goes alongside the other elements of the application – deposit size, income etc, which make up the case. A lender will either want to support it or possibly have concerns about it.
Can we use a guarantor for a joint mortgage if I have bad credit?
Yes, it’s possible to use a guarantor for a joint mortgage, even when you or your partner have bad credit. It won’t really affect the credit scoring process, though. A guarantor is added to a mortgage to help with affordability problems, rather than credit.
The guarantor’s income is considered alongside the mortgage applicant’s incomes to arrive at a mortgage balance the lender is comfortable with. It’s really a way to achieve a better loan size.
How long do I have to wait after improving my credit score before applying for a joint mortgage?
You can look for a new deal at any point in your journey towards a better credit score. For every month that passes, you’re further away from your last default or credit blip, and your mortgage options should improve.
A better question might be, how long do I need to keep a good credit score before I can apply for a mortgage? And as an answer, we’d say six months with an improving credit history should significantly improve your mortgage choices. Better rates are likely to be available, too, when you’ve seen continuous positive changes in your score.
However long you’re making improvements to your finances, we just recommend staying in touch with us. Keep us up to date with your progress and we can continue searching on your behalf to present the most suitable deals at each stage.
How can a mortgage broker help here? Have you got anything else to add?
When it comes to anything outside of standard mortgage lending – like bad credit history – our greatest strength is knowing which lenders to go to first. Our knowledge and experience saves you from applying to lenders that simply won’t accept a less than perfect credit score.
Not only will our advice and recommendation make the application process more straightforward, it could also help you protect your credit. Every time you make an application, a check is run on your file which leaves a mark. The more checks on your file, the worse your score becomes – further impacting the mortgages you can secure.
Plus, we’re here to help you make sense of mortgages: what you’ll pay, the impact of your financial behaviour on borrowing and how to improve your credit score.
Our advisors work with clients in a wide variety of situations and we’re well versed in how each type of default or blip will affect your application. We’ll help you work on a plan to help make your home-buying dreams a reality. At the end of the day, that’s what’s important.
After all the technical details have been discussed and understood, we get you into a home and you build a life in it. It’s also our job to help keep you in that home if the worst were to happen. So we’ll talk to you about the protection policies available, making sure you know how you’ll afford mortgage repayments if one of you were unable to work anymore.
YOUR HOME/PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP TO DATE WITH YOUR MORTGAGE REPAYMENTS.
There may be a fee for mortgage advice. The precise amount of the fee will depend on your circumstances and will be discussed and agreed with you at the earliest opportunity. Typically, in most cases, our fee will be £495. We charge £595 for bridging and adverse credit cases; and £995 for Later Life Lending.
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