If you’re looking for a mortgage but worried about having bad credit, one of the key questions you’ll have is: how much deposit do you need? Many people assume that bad credit completely blocks access to homeownership, but this isn’t always true.
Typical Deposit Requirements for Bad Credit Mortgages
Generally, if you’ve got bad credit, you’ll need a bigger deposit compared to someone with a strong credit history. While borrowers with excellent credit ratings might secure mortgages with deposits as low as 5%, lenders typically ask for between 15% to 25% deposit when offering mortgages to those with bad credit.
The exact percentage depends heavily on your personal circumstances, including:
- The type of credit issues you’ve faced (e.g., missed payments, defaults, CCJs, bankruptcy)
- How long ago these issues occurred
- Your current income and financial stability
- The lender’s own criteria
Why Do You Need a Larger Deposit?
Mortgage lenders see borrowers with poor credit as higher risk. A larger deposit reduces this risk because it means you have more equity in your home from the outset. It also demonstrates financial commitment and responsibility, reassuring the lender that you’re serious about managing your finances carefully.
How Can You Improve Your Chances?
- Increase your deposit – The larger your deposit, the better your chances of securing a mortgage with reasonable rates.
- Repair your credit score – Take steps to improve your credit history by paying off debts, reducing credit card balances, and correcting any inaccuracies on your credit file.
- Seek specialist lenders – Many UK lenders specialise in mortgages for people with bad credit. They understand your circumstances and offer products tailored specifically for your situation.
Finding the Right Mortgage with Bad Credit in the UK
In the UK, the market for bad credit mortgages is extensive, with several specialist lenders available. High-street banks may decline your application, but specialist mortgage brokers and lenders often have more flexible terms. Getting professional advice from a local mortgage advisor or broker can significantly boost your chances.
Are Interest Rates Higher?
Typically, yes. Interest rates on bad credit mortgages tend to be higher than those offered to borrowers with excellent credit histories. However, rates can vary significantly between lenders, so shopping around and seeking professional advice can help you find the most affordable option.
Speak to a Local Expert Today
If you’re based in the UK and struggling to secure a mortgage due to past credit issues, don’t lose hope. Expert mortgage advisors specialise in helping borrowers like you secure suitable deals.
Get in touch with our experienced team today. We’ll help guide you through the process, answer your questions about deposits, and help find a mortgage that’s right for you—even with bad credit.
FAQs
Yes, many lenders accept gifted deposits from family members, even if you have bad credit. You’ll typically need written confirmation from the person providing the deposit, confirming it is a gift, not a loan.
Certain government-backed schemes, such as Shared Ownership, may still be accessible with poor credit. Eligibility depends on your personal circumstances and the specific credit issues you’ve had. It’s best to speak with a mortgage advisor to see what’s possible.
A larger deposit significantly improves your chances of mortgage approval but doesn’t guarantee it. Lenders will also look at your affordability, income, expenses, and the specifics of your credit issues.
Getting a zero-deposit mortgage is challenging, especially with bad credit. Most lenders will require a deposit of at least 15-25% in these cases, but occasionally family-assisted mortgages or guarantor mortgages may provide options to borrow without an upfront deposit.
Using a specialist mortgage broker isn’t mandatory but highly recommended. Brokers often have access to specialist lenders who are more flexible and understanding of bad credit scenarios.
Generally, lenders prefer deposits from your savings or gifted money rather than borrowed funds. Using a personal loan or credit card debt to fund a deposit is usually discouraged by lenders, particularly for applicants with existing credit concerns.
Yes, a stable employment history and steady income can positively influence your mortgage application. Lenders consider stability and reliable earnings as strong indicators of affordability, helping to offset some credit-related risks.
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