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Mortgage Advisor & Director
Having bad credit doesn’t always restrict your maximum mortgage borrowing. Here, you will learn how affordability is calculated for borrowers with adverse credit and will find a calculator for crunching the numbers yourself.
How much can you borrow on a mortgage with bad credit?
Maximum mortgage borrowing is often no different for borrowers with bad credit. Provided your credit issues don’t prevent you from qualifying for a mortgage, lenders are likely to calculate your affordability in the same way they would for an applicant with clean credit.
Bad credit can, however, sometimes have an indirect effect on affordability. Having recent or severe bad credit can limit the number of mortgage providers and deals you can access.
Some of these lenders offer mortgages based on higher income multiples than the standard 4-4.5 times salary typically used on the high street, but if your credit history prevents you from meeting their eligibility criteria, you might be limited to stricter borrowing limits.
Calculate your affordability
You can use our bad credit mortgage calculator below to work out how much you can potentially borrow. We have tailored this calculator to return results based on the income multiples that are usually available to borrowers with a history of adverse credit.
Now that you have run your calculations, you can compare rates for free and speak to a mortgage broker who specialises in bad credit - get started here.
Which income multiples do bad credit mortgage lenders use?
Most bad credit mortgages are based on no more than 4-4.5 times the applicant’s annual salary, but there are specialist bad credit mortgage lenders who may offer more.
The table below shows the highest salary multiple available at each bad credit lender:
|
Bad Credit Mortgage Lender |
Highest Salary Multiple Available |
|
4.5 times annual income |
|
|
6 times annual income |
|
|
5 times annual income |
|
|
5.5 times annual income |
|
|
4.49 times annual income |
|
|
4.49 times annual income |
Please note that mortgages based on 5.5-6 times salary are rare for borrowers with bad credit. Kensington, for example, will only offer these multiples to applicants in high-earning professions, such as medicine or law and may place more scrutiny around the application.
Compare bad credit mortgage rates for FREE
How much your repayments will be
The amount you will pay for a bad credit mortgage each month will depend on the interest rate you qualify for, the term length you choose and the type of mortgage you opt for.
Rates can be steeper for borrowers with bad credit, so it is likely that the one you are offering is around 1-2% higher than the rates you see advertised by high street banks.
You can use our calculator below to get an idea of how much your bad credit mortgage will cost each month and overall. We have set the default interest rate on this tool at 6% to reflect bad credit mortgages, but this can be changed manually if you wish.
Read more about how mortgage repayments are calculated in our standalone guide.
Can you get a mortgage with bad credit but good income?
Yes, it’s certainly possible but your bad credit will be assessed by mortgage lenders in the same way, regardless of how high your income is. If you have a severe type of bad credit, like a bankruptcy or repossession, or the issues are very recent, being a high earner is unlikely to convince most lenders that you are low risk and creditworthy.
However, earning over a certain amount of income (anywhere between £50k and £100k as a starting point) can grant you access to a wider range of mortgage deals and income multiples. Having a greater range of products to choose from can increase your chances of getting approved for a mortgage with bad credit, for obvious reasons.
If you earn a high salary, the best thing you can do to increase your chances of securing a bad credit mortgage is save up extra deposit. If you can cobble together at 30-40% of the property’s value, this will open you up to a wider range of rates and deals.
What to do after running your calculations
Now that you have a clearer idea of how much you can borrow on a mortgage with bad credit and how much it will cost, you can compare the latest rates for free on Teito and speak to a broker who specialises in borrowers with adverse credit as part of the service.
Here are just some of the reasons people choose us for their bad credit mortgage:
- You can compare the latest bad credit mortgage rates in seconds
- Our brokers can access exclusive deals for borrowers with adverse
- We are 5-star rated on leading review websites
- We can help you secure an agreement in principle in minutes
Ready to compare bad credit mortgage rates for free and speak to a broker who specialises in customers just like you? Get started here.
FAQs
Affordability is assessed in exactly the same way for first-time buyers with bad credit, compared to homemovers, meaning you can typically borrow 4-4.5 times your annual salary, provided your credit problems don’t prevent you from qualifying for a mortgage.
You can potentially boost your affordability and eligibility by exploring family support options, such as guarantor mortgages, or government schemes like the First Homes initiative.
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.