Mortgage with bad credit

[Sunshine288]

Hi all, hoping for some advice or hear some success stories!

Myself and my boyfriend are hoping to buy our first house next year (currently renting). Recently found out I’m pregnant so ideally would want to get a mortgage before baby is born as I know it’s harder to get a mortgage with dependents

However he has bad credit (CCJ in 2018, payday loans taken out in the last 6 months). He is on top of everything now and can pay off everything within the next few months so that will obviously improve his credit a bit.
I have very good credit history so hoping that will bring things up too?

We would have between 5 and 10% deposit. Is there anyone else here who’s managed to get a mortgage in a similar position?

They'll focus on your last 6 months so clean everything up and then keep it clean. Also, use a mortgage broker. They'll have access to deals that you won't.

Pay everything off as soon as you can and neither of you take out any more loans from now on. Go to a specialist broker and see what they suggest as there are some banks that are more lenient than others. If you can save up 10% deposit before then you’ll be in a better position as you might struggle to get a 95% mortgage with bad credit.

hey OP so I’ve been/am in a similar situation with my partner. Unfortunately for me no one would even consider us as a joint application (I never went to any brokers however that deal with bad credit and mortgages as the rates were too high even back then) his issues were from 2017 and earlier. I brought the house on my own in Jan 2020 was hoping to get him on the mortgage earlier in Jan this year when it came for renewal they wouldn’t touch us again. He never had a CCJ. His debt was pay day loans with some missed payments. I’m hoping by next renewal most of the ones there were issues with will have fallen off. You may get lucky with a provider but I think you would need a much bigger deposit than 5-10% to secure a deal. Best bet is to speak to a broker I went through one and he told me within 24hrs that I would need to go it alone. It restricted what we could get but it’s both our home in my eyes.

I think you will struggle in this climate. If you asked this question last year I’d say yes it’s possible with a sub-prime lender who typically charged around 5% interest back then. It would have been very unlikely a high street bank would have offered you one.

However now, the interest rate is around that much for a high street mortgage so I dread to think what it’ll be for a sub-prime. They’ll most likely want a much higher deposit now too, many high street banks have pulled their best mortgages.

the CCJ will fall off soon but they hate payday loans. Are there any defaults? I’d say wait around a year, add to your deposit, the CCJ will fall off and the payday loans will move further into the past. They do look into the last 5-6 years on your credit report. Hopefully interest rates will drop too. Now is one of the worst times to buy a house, especially with a small deposit and adverse credit.

I don't know if it's true but I've heard most reputable lenders won't touch anyone who took out a payday loan, even if it was managed well and paid back.

Thanks all for your help! I’ve just been reading about joint borrower sole proprietor mortgages and think this may be an option for us if a family member is willing to help - has anyone had any experience of these?
Seems best to keep my boyfriend as far from the mortgage as poss 🙄

We looked into this years ago when our earnings were less. I can’t remember the reasons why we couldn’t go for it, but it was a lot more complex when you look into it and could have been detrimental to the relative who’d be helping us. I think it was because she would have had to put her house up as collateral on top of being tied to the mortgage. It was a massive risk to her as if things went tits up she could lose her home. Don’t quote me as it may have been for a different option, just this rings a bell.

I think it might have been a guarantor mortgage actually

Yes @Winceybincey I was thinking that sounds like a guarantor mortgage!

I work in mortgages. You're going to struggle if I'm honest and I think a 95% mortgage won't be possible. 90% might be achievable. The CCJ is less of an issue than the payday loans. Lenders don't like payday loans especially within the last 12m. It shows bad money management. But saying that there may be a lender that would go with it. Best thing to do is get in touch with a whole of market broker firm and they will be able to help

We got a mortgage with a mainstream bank, even though my partner had quite a few payday loans within the previous few years. We had to put down 15% deposit though, so definitely doable if you have the funds.