How to Get Help to Buy Mortgage with Bad Credit

Getting help to buy a mortgage can be a great way for some buyers to get on the property ladder who otherwise would not be able to, but what about those with bad credit?

Just because you’ve been declined before or told that your bad credit will prevent you from getting help to buy a mortgage does not necessarily mean the end of the road.

There are a number of options available to those with unfavorable credit to help them apply for and successfully achieve a good deal on a Help To Buy Mortgage.

What is Help to Buy?

The governments Help to Buy scheme is designed to help those who would otherwise not be able to afford the initial investment which is typically expected when buying a property and instead can require as little as a 5% deposit.

In order to be eligible for a Help to Buy Loan you must;

• Be a resident of the UK
• Be over 18 years old
• Be either a first-time buyer or existing homeowner looking to move
• The property you are buying is a new build
• This home is to be your main dwelling, not for use as a second home or buy to let
• The property purchase price should be less than £600,000

How Does a Help to Buy Mortgage Work?

The Help to Buy scheme works by providing an equity loan of up to 20% of the property’s value (40% in London) which will be interest free for the first 5 years.

This means that with a deposit of just 5% you can apply for a 75% loan-to-value mortgage (55% in London) which makes for a much better situation to be in when approaching lenders.

Can I Get Help to Buy Mortgage Even With a Bad Credit?

Although it is more often than not much easier to get a mortgage with good credit, it does not mean that having an adverse credit rating automatically rules you out of buying a property.

Using the government equity loan plan allows lenders to be more flexible with their underwriting terms due to the 75% LTV mortgage from which they base their decisions on.

This allows them to offer more favourable terms due to the lower risk and overall, more attractive prospect of you as a buyer.

There are also specialist lenders who are more likely to consider lending to buyers with credit issues and can offer a mortgage where others cannot.

Some of the adverse credit issues that some specialist lenders will consider include:

• A low credit score
• Defaults and CCJs
• Missed and late payments

• Debt management plans

• IVAs
• Mortgage arrears
• Bankruptcy

How Do I Apply For a Help to Buy Mortgage With Bad Credit?

For anyone looking to apply for a mortgage it is always best to start with taking an in depth look at your financial standing by way of a credit score report and checking your credit file.

This will allow you to identify any potential issues before you begin the process and will cover the past 6 years of your credit commitments.

If you are worried about your credit then it is always advisable to get in touch with a professional financial or mortgage advisor who specializes in the matter of Help to Buy Bad Credit mortgages.

They will be able to help determine eligibility, offer guidance and advice on what steps to take, and have strong relationships in place with specialist lenders who are more likely to accept those with a bad credit history.

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