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It should come as no surprise to hear that having bad credit makes it more difficult to get a mortgage, but how do lenders assess joint mortgages where one applicant has bad credit?
Here, you will learn how to get a joint mortgage under these circumstances, how the applicant’s bad credit can affect the application, and what we can do to help.
Can you get a joint mortgage if one applicant has bad credit?
Yes, it’s possible, but if you're looking to take out a joint mortgage with someone who has adverse credit, there are a few things you should know and take on board.
Firstly, some lenders might decline you outright as mortgage providers take a holistic view of joint applications. In other words, they review the credit histories and borrowing profiles of all applicants, and will factor in the other applicant’s poor credit, even if yours is clean.
However, depending on the age, severity and circumstances behind your partner’s bad credit, you could well have borrowing options, and some lenders are more lenient than others when it comes to adverse, and there are even those who specialise in it.
If you're determined to get a mortgage with someone who has bad credit, your best bet is to speak to a specialist mortgage broker, like the advisers at Teito. They will assess your specific circumstances and advise you on the best way to move forward.
How does bad credit affect a joint mortgage?
When you apply for a joint mortgage, the lender will carry out a credit check on all applicants to assess their financial history and see if they’re likely to default on the loan.
If any of the applicants have bad credit, certain lenders will reject your application outright. However, there are some who will still consider you for a mortgage, albeit with stricter terms and conditions. For example, you may be required to provide a larger deposit than someone with good credit. You may also be offered a higher interest rate to offset the lender's risk.
It's important to remember that even if you're not the one with bad credit, having someone with a poor credit history on your mortgage application can still negatively impact your own chances of being approved. This is because lenders will view the application as a higher risk. As a result, they may be less likely to offer you the best terms and conditions.
Not all bad credit is the same in the eyes of a mortgage lender. Some people may have had a severe issue, such as a county court judgment (CCJ) against them in the past, while others may simply have missed a few credit card or loan payments. Mortgage lenders will consider the age and severity of the issue when making their decision.
Someone who missed a couple of payments a few years ago is likely to be viewed more favourably than someone who defaulted on their mortgage last year, plus applying with an applicant who has clean credit can boost the overall strength of the application.
How do credit scores work on a joint mortgage?
When two (or more) people apply for a joint mortgage, all of them need to go through the usual credit check and affordability assessment process and lenders will take all of the information, including credit scores, into account. This means that if one person has bad credit, it is still possible to get approved, especially if the other person has good credit.
Of course, this is not always the case, and each lender will make their own decision about whether or not to approve a joint mortgage application.
While credit scores can be useful as a rough guide to measure the strength of your combined credit histories, keep in mind that some lenders don’t use credit scoring at all. They will still review your files and assess any bad credit they find, but will not apply a numerical score to the joint application that determines whether it’s approved.
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Can you add your partner to your mortgage if they have bad credit?
Yes. If you're looking to add your partner to your existing mortgage, they will need to meet the lending criteria, which includes a credit search.
If your partner has a bad credit history, there's no guarantee that they will be accepted onto the mortgage. However, some lenders may be willing to consider their application if they have a good income, can afford the repayments, and the level of risk is acceptable.
It's important to remember that if your partner is added to your mortgage, a financial tie is created between you and them. When it comes to future finance applications, their credit history will also be taken into account. For this reason, it's important to only add someone to your mortgage if you're confident that they will make the repayments on time and in full.
If you're looking to get a joint mortgage with someone who has bad credit, your best bet is to seek professional mortgage advice.
Does your spouse have to pay half the mortgage?
If you're married or in a civil partnership, you may be wondering if your spouse is legally obliged to pay half the mortgage. The answer is no - unless they are legally named on the mortgage, they are not responsible for the repayments.
If you are jointly named on the mortgage, both you and your spouse are responsible for the payments, regardless of who earns more money, but lenders are not concerned what percentage of the debt each applicant covers, as long as the repayments are made in full and on time.
If you're separated or divorced, things can get a bit more complicated. It's important to seek legal advice if you're in this situation to find out what your options are.
Tips for Improving your credit rating
If your partner has adverse credit, credit issues, payday loans or other debts, there are some things you can both do to help improve your credit rating:
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Check your credit report for any errors and dispute them if necessary.
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Register on the electoral roll at your current address.
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Make all loan, credit card and mortgage repayments on time and in full.
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Pay off any debts and close any unused accounts.
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Only apply for credit products when you need them.
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Keep your credit balances low.
Taking these steps will help to improve your credit rating and make it more likely that you'll be approved for a joint mortgage in the future.
How to get a joint mortgage with one bad credit applicant
While it may be more difficult to get a joint mortgage with one bad credit applicant, it's not impossible. The most important thing is to seek professional mortgage advice and compare different products on the market to find the best deal for you.
At Teito, our advisers work with mortgage lenders from across the entire market. We can help you find a mortgage that meets your needs, even if you have a bad credit history. We'll help you find the right lender and get your mortgage approved quickly and easily.
To learn more about our services, compare the latest mortgage rates and speak to a broker about bad credit mortgages, simply get in touch with our team today.
FAQs
Yes, but it will be more difficult to be approved. A County Court Judgement (CCJ) is a court order that requires someone to repay the money they owe. It's generally issued when someone has failed to make repayments on a debt, such as a loan or credit card.
If you're looking to get a joint mortgage and one person has a CCJ against them, it will be more difficult to get approved, but not impossible. Most lenders will view a CCJ as a red flag and will want to see evidence that the debt has been repaid in full and removed from your credit files before they'll consider your application.
If you're in this situation, it's important to get professional mortgage advice to give you the best chance of getting approved.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.