How to get a mortgage with bad credit UK but has good income from employment and or business?

There are people who have screwed their credit scores in the UK, but has good income from their full time employment or business. If you are one of them and want to know how to get a mortgage with bad credit, this guide will explain to you.

I have personally seen and know how this works and there is hope for anyone for their past mistakes. Having a good credit score is vital to get a mortgage passed fast and easy. And I have been lucky to get mortgages to buy my own property and the buy to let properties in the UK.

Buying a property is a good thing to do and no matter what some property gurus says, try to get one on freehold and experience. Live it, build it on a freehold land, play in it and see for yourself. Once you get started with the first property and do it, you will see the potential to get in to the buy to let property business if that’s something you want to. I do it to create housing for others and I like the property business.

Let’s go and find out how you can get a mortgage with bad credit and what you can do about it to buy your dream house.

Here’s the 7 steps guide on how to get a mortgage with bad credit in the UK despite having a good income:

7 Steps to get a mortgage with bad credit

Step 1: Know Your Credit Score It’s important to be aware of your credit score before applying for a mortgage. In the UK, credit scores are determined by credit reference agencies such as Experian, Equifax, and TransUnion. You can obtain a free copy of your credit report from these agencies and review it for any errors or inaccuracies that may be affecting your credit score. Knowing your credit score will help you understand the extent of your bad credit and how it may impact your mortgage application.

Step 2: Understand Lenders’ Criteria Different lenders have different criteria for granting mortgages, especially to borrowers with bad credit. It’s important to research and understand the lending criteria of different lenders to increase your chances of approval. Some lenders specialize in providing mortgages to borrowers with bad credit, while others may have stricter requirements. Look for lenders who are known for being more flexible with credit scores or who specifically cater to borrowers with bad credit.

Step 3: Demonstrate Good Income Having a good income can be a significant advantage when applying for a mortgage with bad credit. Lenders are more likely to approve a mortgage application if you have a stable and sufficient income to cover your monthly mortgage payments. Be prepared to provide evidence of your income, such as pay stubs, tax returns, or bank statements, to support your mortgage application. This can help offset the negative impact of your bad credit.

Step 4: Save for a Bigger Deposit A larger deposit can offset the risk associated with bad credit and improve your chances of getting approved for a mortgage. Lenders may be more willing to overlook a lower credit score if you can provide a higher deposit. Aim to save as much as possible for your mortgage deposit to demonstrate your financial stability and commitment to homeownership.

Step 5: Get a Co-signer or Guarantor If your bad credit is making it challenging to secure a mortgage on your own, you may consider getting a co-signer or a guarantor. A co-signer is someone who agrees to share the responsibility of the mortgage with you and will be equally liable for the repayments. A guarantor, on the other hand, is someone who promises to step in and make the mortgage payments if you default. Having a co-signer or guarantor with a good credit score can increase your chances of getting approved for a mortgage.

Step 6: Seek Professional Mortgage Advice Navigating the mortgage market with bad credit can be complex, and it’s essential to seek professional mortgage advice. Mortgage brokers are experts who can help you understand your options and identify lenders who may be more likely to approve your application based on your unique financial situation. They can also assist you in preparing your mortgage application and increasing your chances of approval.

Step 7: Be Prepared for Higher Interest Rates It’s important to note that if you have bad credit, you may be charged a higher interest rate compared to borrowers with good credit. Lenders may view bad credit as an increased risk, and higher interest rates are often used to compensate for that risk. Be prepared for this possibility and ensure that the higher interest rate is still affordable for your budget.

Getting a mortgage with bad credit in the UK but having a good income is possible with careful planning and preparation.

Know your credit score, understand lenders’ criteria, demonstrate good income, save for a larger deposit, consider getting a co-signer or guarantor, seek professional mortgage advice, and be prepared for higher interest rates.

With the right approach and the help of a mortgage professional, you can increase your chances of securing a mortgage and achieving your dream of homeownership.

With all that’s been said, if you are willing to work hard, make money, save, have patience for a year or two you can turn you bad credit to be good again and reach the best possible credits scores.

I’ve personally worked my way to have the top most credit scores in the UK, reaching 999 in Experian.

There are smart ways to increase your credit scores in a legal manner.

I do not advice or encourage anyone to pay someone to get their credits scores fixed as that’s not the right approach.

How to fix your bad credit scores?

Fixing a bad credit score and improving your creditworthiness is a critical step in preparing to get a mortgage to buy a home in the UK.

A good credit score demonstrates your financial responsibility and makes you a more attractive borrower to lenders, increasing your chances of mortgage approval and potentially getting better interest rates.

Here are some steps to help you improve your credit score and get on the path to securing a mortgage:

1. Review Your Credit Report Start by obtaining a copy of your credit report from credit reference agencies such as Experian, Equifax, and TransUnion. Review it carefully for any errors, inaccuracies, or fraudulent accounts that may be negatively affecting your credit score. Dispute any errors you find and work with the credit agencies to have them corrected. This can help improve your credit score if any discrepancies are discovered and rectified.
2. Pay Your Bills on Time One of the most crucial factors that affect your credit score is your payment history. Make sure to pay all of your bills, including credit cards, loans, and utility bills, on time every month. Late payments can significantly impact your credit score and may take time to recover from. Consider setting up automatic payments or reminders to ensure you never miss a payment.
3. Reduce Your Credit Utilization Credit utilization refers to the amount of credit you are using compared to your total available credit. High credit utilization can negatively impact your credit score. Aim to keep your credit utilization below 30% of your available credit limit. If possible, try to pay off outstanding balances or reduce them to lower your credit utilization ratio and improve your credit score.
4. Avoid Applying for New Credit Each time you apply for credit, such as a credit card or a loan, it results in a hard inquiry on your credit report, which can lower your credit score. Avoid applying for new credit unless necessary, especially when you’re preparing to apply for a mortgage. Multiple hard inquiries within a short period of time can signal to lenders that you may be experiencing financial difficulties, which can negatively impact your creditworthiness.
5. Maintain Old Credit Accounts The length of your credit history also plays a role in your credit score. Older accounts with a positive payment history can help improve your credit score. Avoid closing old credit accounts, especially those with a good payment history, as it can shorten your credit history and potentially lower your credit score. Instead, keep these accounts open and use them responsibly to maintain a positive credit history.
6. Resolve Outstanding Debts If you have any outstanding debts, such as collections or defaults, work on resolving them as soon as possible. Contact the creditor or collection agency and arrange a payment plan or negotiate a settlement. Once the debts are resolved, make sure to obtain confirmation in writing and ensure that the information is updated on your credit report. Resolving outstanding debts can help improve your credit score and show lenders that you are actively managing your debts.
7. Establish Positive Credit History If you have little or no credit history, it may be helpful to establish a positive credit history. You can do this by getting a credit card or a small loan and making timely payments. Consider getting a credit builder card or a secured credit card, which are designed for individuals with limited or poor credit history. Responsible use of credit can help establish positive credit history and improve your credit score over time.
8. Be Patient and Persistent Improving your credit score takes time and effort, and it’s important to be patient and persistent. Building a good credit score is a long-term goal that requires consistent positive financial behavior. Continue to make all of your payments on time, keep your credit utilization low, and avoid applying for unnecessary credit. Over time, your credit score will gradually improve, and you’ll be in a better position to qualify for a mortgage.

addition to the above steps, there are a few other strategies you can employ to further improve your credit score and increase your chances of getting a mortgage with bad credit:

9. Seek Professional Help If you’re struggling with bad credit and are unsure of how to proceed, it may be beneficial to seek professional help. Consider working with a credit counseling agency or a financial advisor who can provide guidance and advice on how to repair your credit. They can help you create a budget, negotiate with creditors, and develop a plan to improve your credit score.
10. Build a Stable Employment History Having a stable employment history can positively impact your creditworthiness. Lenders prefer borrowers who have a steady source of income as it demonstrates financial stability and the ability to repay a mortgage. Try to maintain a stable job for an extended period of time, and avoid frequent job changes or gaps in employment, as this can raise concerns for lenders.
11. Save for a Larger Down Payment A larger down payment can compensate for a lower credit score and increase your chances of getting approved for a mortgage. Saving up for a larger down payment demonstrates financial discipline and reduces the amount of money you need to borrow, which can make you a more attractive borrower to lenders. Aim to save as much as possible for a down payment to improve your chances of getting a mortgage.
12. Consider a Joint Mortgage or Guarantor If your credit score is too low to qualify for a mortgage on your own, you may consider applying for a joint mortgage with a partner or spouse who has a better credit score. Alternatively, you could also ask a family member or a trusted friend to act as a guarantor on your mortgage. This means they will be responsible for the mortgage payments if you default, and their good credit score can help compensate for your bad credit.
13. Be Realistic About Your Budget When applying for a mortgage with bad credit, it’s crucial to be realistic about your budget. Consider how much you can comfortably afford in terms of monthly mortgage payments, property taxes, insurance, and maintenance costs. Avoid stretching your budget too thin, as this can lead to financial strain and potential default on the mortgage, further damaging your credit score.
14. Shop Around for Lenders Not all lenders have the same credit requirements, so it’s important to shop around and explore different options. Some lenders specialize in working with borrowers who have bad credit or offer special mortgage programs for those with lower credit scores. However, keep in mind that these loans may come with higher interest rates and fees, so thoroughly evaluate the terms and conditions before committing to a mortgage.

In conclusion, while getting a mortgage with bad credit in the UK can be challenging, it’s not impossible.

By taking proactive steps to improve your credit score, being responsible with your financial habits, and exploring different options, you can increase your chances of obtaining a mortgage with good income despite having a less-than-perfect credit history.

It may take time and effort, but with persistence and careful planning, you can work towards achieving your goal of buying a home in the UK.

Want to get a mortgage the smart way?

Get in touch with BVS Mortgages and try to speak to Roshan directly by booking a call or meeting with him.

I have personally worked with him and the team at BVS Mortgages and they are the best mortgage advisors I know.