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FIRST TIME BUYER BAD CREDIT MORTGAGE

IF YOU ARE A FIRST TIME BUYER NEEDING A BAD CREDIT MORTGAGE THEN LET US HELP YOU MAKE THE BIGGEST PURCHASE YOU'VE MADE SO FAR.

Are you looking for a mortgage as a first time buyer with bad credit? Let us guide you through your first property purchase.

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It's never been a bigger challenge buying your first home. You've probably been saving for a long time to pull together a deposit while your current rent and bills are rising. Plus a lack of homes in the UK, any property that does look like 'the one' is quickly under offer and taken off the market. Then in more recent times, mortgage interest rates have risen at their fastest pace in decades.

 

Now add into the mix having a poor credit history and needing a bad credit mortgage. It can look almost impossible; but there is help. Many lenders may see a low credit score as a red flag and may be hesitant to approve a mortgage. However, it's important to remember that there are still options available for those seeking a first time buyer bad credit mortgage.

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Traditional lenders may have strict credit requirements and be hesitant to approve a mortgage for someone with bad credit. However, at Twin Pine we have access to specialist lenders who specialise in first time buyer bad credit mortgage options exist and understand the unique challenges faced by those with bad credit.These specialist lenders provide mortgages to people with bad credit, even if they are first time buyers. 

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These lenders will look at your situation as a whole without basing their entire decision on a credit score. They will even consider lower deposits, with a typical deposit being around 10% of the purchase price. Twin Pine Mortgages are experts at helping our first time buyers with bad credit by doing lots of research, really getting to know you and your situation then putting together your mortgage application with a lender. 

Can a first time buyer get a mortgage with poor credit history?

The simple answer is YES.

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A bad credit history is a lot more common than people realise. There is a lot of information which feeds into your credit history and some people don't even know they have poor credit until they come to borrow money from a lender.

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It could be an error setting up a direct debit on a new credit card, not being on the electoral roll or having moved around a lot in recent years or simply not having had any credit at all. We see many customers who have even been issued a Count Court Judgement (CCJ) and don't even know it.

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There are lenders out there that understand this and are specifically set up to help arrange mortgages for first time buyers with bad credit. These lenders are classed as specialist lenders and are often not high-street banks or building societies. Their lending criteria are geared to allow first time buyers with missed payments, CCJ's, defaults and other bad credit issues. So, it's important to remember that a mortgage for first time buyers with bad credit is still an option.

How to increase your chances of gaining a first time mortgage with bad credit.

There are a few things people with bad credit can do to increase their chances of being approved for a bad credit mortgage as a first-time buyer. 

 

To improve your chances of being accepted for a bad credit first-time buyer mortgage there are some simple steps you can take.

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1) Understand your credit report. If you are not sure what it is that is giving you a bad credit history, it's difficult to match your situation to a lender's criteria. You can sign up for monthly credit reports that give you a full view of what lenders can see. 

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2) Understand your finances. Lenders want to know that you can plan your finances and understand what money is coming in each month and how much your bills are likely to be. Using a budget planner will help you to set out your income and outgoings and how much money you have left over to pay towards the mortgage. Consider things like what the council tax is in your area, what your gas and electricity costs will be and what you need to pay on any existing credit cards or loans. Take into account that the interest rate on a bad credit first time buyer mortgage is likely to be slightly higher than a high-street lender.

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3) Get some credit and keep up with the payments. It sounds simple but this is the best way to improve your credit profile. Don't take out lots of debt but getting a credit card, using it to pay for a couple of essentials during the month then paying off the balance in full will help boost your score. Even a first time buyer bad credit mortgage provider will want to know that you will pay your bills on time.

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4) Stay within agreed overdraft limits. This helps to demonstrate that you can budget and manage your finances with any lender. As part of a mortgage application, you will need to provide between 3 to 6 months of bank statements. Showing that your outgoings are less than your income is essential. Also, make sure any bank transfers between you and anyone else do not have any jokey names.

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5) Makes sure you are on the electoral roll at your current address. First-time buyer poor credit lenders use this data to follow your address movements in recent years and they don't like gaps. If there are gaps in your being on the electoral roll, be ready to provide some proof of address, such as a driver's licence.

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6) Don't miss paying any of your credit commitments. If you have a bad credit history, say an old default or CCJ, the lender will want to see that since that was issued that you have been able to manage your finances and pay your debts on time. Try not to rely upon any payday loans as these are typically used by people whose outgoings are higher than their income. 

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7) Don't do a lot of credit searches. If you allow lots of different lenders to run a credit search on you in a short amount of time this can have a negative effect on your credit profile. Lenders will see that you've approached lots of different lenders at the same time and presume they weren't prepared to lend you any money.

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8) Get an Agreement in Principle. If you have planned out your finances and know how much you can afford and see a property you like, you're probably going to need an Agreement in Principle. This is a document from a lender saying that they have looked at your credit profile, income and outgoings and are happy 'in principle to lend you the money you need. An estate agent is going to want to see this when you make an offer to buy the property.  Make sure the lender uses a 'soft search' approach so your credit profile is not impacted by them doing the credit search. Twin Pine Mortgages can complete this step for you.

The importance of saving for a deposit when you need a mortgage for bad credit as a first time buyer.

As a first time buyer with a bad credit rating, saving for a deposit is one of the most important steps in the mortgage process. A larger deposit means a lower loan-to-value (LTV) ratio, which can help you secure a better interest rate and lower monthly payments. It also demonstrates to lenders that you are financially responsible and committed to the mortgage process. 

 

Additionally, having a larger deposit can give you more negotiating power when it comes to interest rates and loan terms.

Mortgage lenders for first time buyers with bad credit.

When you first start looking for a mortgage for bad credit as a first-time buyer people will tell you to approach your current bank or building society. This is natural as you've probably been with them for a while, got a track record with them and trust them too. However, this can lead to disappointment if they decline you. This is not uncommon as their lending criteria and business models are usually set up to deal with clean credit histories. 

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When you are doing any research it is easy to overlook specialist lenders for a couple of reasons. Firstly, because they are probably names you've never heard of before such as Aldermore Bank or Kensington Mortgages and not a big high-street name. Secondly, many of the specialist lenders will only sell their mortgages through brokers such as Twin Pine Mortgages as they want to make sure you get good, professional advice. This can mean that they will not appear on the usual comparison sites.

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Just because the specialist lenders are not showing on comparison sites or not a name you're familiar with doesn't mean you should ignore them. As long as the lender is registered and regulated by the Financial Conduct Authority and based in the UK you have got plenty of consumer protection. They have to act in your best interest and provide an appropriate level of service. They may also offer a wider range of mortgage options specifically tailored to those with bad credit. Working with a specialist lender can increase the chances of being able to get a mortgage for a bad credit as a first-time buyer. It is important to research and compare different lenders to find the best fit for your needs.

What to expect during the application process for a first time buyer bad credit mortgage

Applying for a first time buyer bad credit mortgage can be a daunting process, so it’s helpful to know what to expect. Here's a rundown of the typical application process:

 

  1. Pre-Approval: Before you start the application process, it's important to get pre-approved by a lender. This will give you an idea of what you can afford and help you prepare for the mortgage process.

  2. Document Preparation: You'll need to provide a variety of documents to the lender, including proof of income, employment history, and expenses. Make sure you have all of the required documents ready before starting the application process.

  3. Credit Check: The lender will perform a credit check to assess your creditworthiness. Be prepared for the lender to ask about any negative marks on your credit report and why they occurred.

  4. Loan Application: Once you have your documents ready, you can complete the loan application. This will include information about your income, employment, expenses, and debts.

  5. Loan Underwriting: The lender will review your loan application and determine if you are eligible for a mortgage. They may also request additional information or documentation before making a final decision.

  6. Legal: A solicitor will deal with all the legal aspects of buying your home including land registry searches, checking contracts and deeds and transferring the money.

  7. Loan Disbursement: Once the legal work is complete, the lender will disburse the funds to purchase your home.

 

Overall, the application process for a bad credit first time buyer mortgage can be lengthy and complicated, but at Twin Pines we’ll be by your side at every step to make the process easier.

Getting a first time buyer bad credit mortgage with Twin Pines

We've all been there, the excitement, the nerves and the what nows?

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With our simple and straightforward approach, we'll take you through every aspect in as much detail as your need.

 

You've probably already taken a look at different mortgage deals and feel a little overwhelmed with the hundreds of different lenders and deals out there. Our friendly team of mortgage specialists will support you by getting to know you, where you want to be and what you can afford. We'll hold your hand through the whole process pulling together research, budgets, estate agents, solicitors and lenders. All you'll need to worry about is finding your first home.

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Whether you've not started looking and wondering if you're deposit is big enough or have already spoken to a few people and want an expert opinion before you put in an offer, give us a call. We're ready and waiting to help on 024 7601 7747.

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Check out this short clip which gives you a guide to the process.

Tips for successfully repaying a first time buyer bad credit mortgage

Once we’ve helped you secure your bad credit first time buyer mortgage, you need to ensure you can keep on top of the repayments. Here are our top tips to ensuring home ownership goes smoothly for you:

 

  1. Make a Budget: Before you start making payments, create a realistic budget that includes all your expenses, including your mortgage payments. This will help you manage your finances and prioritise your payments.

  2. Start Small: Consider making smaller payments initially, so you can adjust to the new expenses. This will help you avoid defaulting on your mortgage payments.

  3. Automate Payments: Set up automatic payments to ensure you never miss a payment. This will also help you maintain a consistent payment history and improve your credit score.

  4. Monitor Your Spending: Keep track of your spending and make adjustments if necessary. Avoid making unnecessary purchases, and cut down on unnecessary expenses to help you save money.

  5. Seek Help: If you are having trouble making your payments, don't hesitate to reach out to your lender for assistance. They may be able to help you modify your loan or provide you with a payment plan that better suits your needs.

  6. Stay On Top of Your Credit Score: Regularly check your credit score and work on improving it. A higher credit score will help you negotiate better interest rates and terms for future loans, so try and keep on top of that bad credit rating.

  7. Avoid Refinancing: Refinancing can be tempting, but it's often not the best option. Refinancing can extend the term of your loan and increase your overall interest expenses, making it more difficult to pay off your mortgage. Make sure to get advice before refinancing so you don’t spend more than you need to.

  8. Stay Committed: Securing a first time buyer bad credit mortgage was the first step but paying a mortgage is a long-term commitment, so stay focused on meeting those payments and enjoying home ownership.

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