This depends on the level of adverse credit you have:
Less than 5% deposit
Unfortunately, if you have less than a 5% deposit and credit issues there are no lenders that will provide you with a mortgage.
However, if you are a first-time buyer with at least 5% and no credit issues this may be possible if you are buying a property via a government backed scheme such as ‘Help to Buy’ or by Shared Ownership.
If you are looking to purchase a resale property and you would like to apply for a 95% mortgage you would have to pass the credit score with a high street lender as specialist lenders do not currently offer 95% mortgages.
Usually, only borrowers that have high credit scores with no or very little adverse recorded against them within the past 6 years would qualify, providing they also have a low debt to income ratio.
Mortgages with a 10% deposit:
These are easier than the 95% mortgages but still by no means easy. 90% mortgages outside of high street lenders are restricted to just a few and to qualify you can’t have any defaults, CCJ’s or missed mortgage payments recorded against you in the past 36 months. In addition to this, you can’t have any more than 2 missed payments on any unsecured commitments in the past 12 months.
Mortgages with a 15% deposit:
Ideally Adverse Mortgage Advisors recommend 15% as a minimum if any adverse is recorded against you. A deposit of 15% or more will give you half a chance with a handful of high street lenders providing your credit issues are mild or over 3 years old, providing that all commitments have been up to date for at least 3 months but ideally 6 months.
If a high street lender is not available, then specialist lenders will not consider your application if you have had a CCJ or missed mortgage payment within the last 24 months.
An 85% mortgage is possible with a default recorded against you over 6 months ago, providing it has been satisfied.
Debt management plans are accepted providing they have been running for longer than 24 months.
Mortgages with a 20% deposit:
Outside of high street lenders, the interest rates start reducing with lenders at this stage to below 5% providing the adverse credit is not too severe. In order to qualify for an 80% mortgage, you can’t have any more than 1 CCJ or 2 defaults recorded against you within the past 36 months or no adverse recorded against you in the past 18 months.
People who have been discharged from a Bankruptcy or an IVA for longer than 24 months will also now qualify for a mortgage with a 20% deposit.
Two missed mortgage payments are also permitted within 24 months providing none of the missed mortgage payments have been in the past 12 months.
Debt management plans accepted providing they have been running for longer than 12 months.
Mortgages with a 25% deposit
If a mortgage is still not possible with a high street lender with a 25% deposit due to your credit score, then there are lots of specialist lenders available to you with this level of deposit. In addition, the level of adverse that would be accepted would also be considerably more with a number of provisions:
If there is adverse recorded against you in the past 12 months but none in the past 6 months, then 3 defaults within 36 months or 2 CCJ’s will also be accepted.
Three missed mortgage payments are also accepted.
Twelve months discharged from a Bankruptcy or IVA accepted.
Debt management plans accepted providing they have been running for longer than 12 months.
Mortgages with a 30% deposit
This level of deposit is much the same as 25% deposit with respect to lenders available however with better interest rates.
Day 1 bankruptcy discharge and people currently in IVA’s will now be considered by lenders.
Deposits with 35% or more
This is the amount of deposit required to give you the best chance of passing the credit score with high street lenders when you have adverse credit. If you still do not pass their credit scoring, then specialist lenders are your only option.
Specialist lenders will usually only insist on this amount of deposit when the property is of nonstandard construction as they are the most vulnerable to price fluctuations and are the most difficult to resell if the property has to be repossessed.
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