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Can I Get A Self-Employed Mortgage With Bad Credit

The latest industry news and guides from Active Mortgages.

It can be tricky getting a self-employed mortgage with bad credit, as there’s two different layers of complexity to your application. But it’s not impossible! Here’s what you need to know.

bad credit mortgage

In this guide

You may have been informed that your likelihood is bleak, yet obtaining a mortgage remains within the realm of possibility, even if you are self-employed and possess an unfavourable credit rating. Your range of options will be limited, and most mainstream banks are likely to reject your application. Nevertheless, specialised mortgage firms exist, catering specifically to intricate cases, including those of self-employed individuals with poor credit.

These particular lenders do not surface in typical online searches, nor will your bank acquaint you with them. Due to their niche nature, gaining access to their mortgages tailored for self-employed individuals with bad credit typically requires engagement with a specialised mortgage broker. This is where our expertise comes into play. Our team of Mortgage Experts exclusively handles the challenging aspects. They boast a track record of successfully securing mortgages for self-employed borrowers with poor credit histories.

Why is it hard to get a mortgage when self-employed?

Securing mortgages while self-employed often involves intricacies beyond those encountered by individuals in full-time positions, chiefly due to the distinct methods used to verify income.

Lenders seek certainty regarding your capability to consistently manage the monthly mortgage repayments and aim to mitigate any associated risks in lending to you. Being self-employed entails income fluctuations, which may lead lenders to perceive it as less stable compared to salaried employment. Consequently, certain lenders lack the infrastructure to navigate the nuances of self-employed income, resulting in outright rejection.

Incorporating a bad credit history further complicates matters, dissuading banks that adhere strictly to lending criteria. You might even receive counsel asserting the impossibility of securing a mortgage, which is not accurate. If your circumstances deviate from the standard, seeking independent counsel from a specialized mortgage broker becomes imperative.

However, not all brokers are equipped for this task. Engaging a specialised self-employed mortgage broker, well-versed in the complexities of adverse credit, becomes essential. Our team of Mortgage Experts handles these challenges routinely, possessing the insight to identify the most suitable lenders and mortgages tailored to your specific situation.

What deposit do I need for a bad credit self-employed mortgage?

Lenders’ assessment for mortgage eligibility extends beyond mere income evaluation. They analyse the potential risk associated with lending, drawing from their prior lending experiences to identify borrower profiles more prone to mortgage default.

Consequently, individuals possessing a track record of bad credit in addition to self-employed income might encounter requests for a larger deposit. A substantial deposit mitigates risk for the lender and can unlock access to more competitive interest rates.

Nonetheless, specialised lenders exist, offering customised mortgages tailored explicitly for self-employed individuals with adverse credit histories. These mortgages are meticulously tailored to suit your unique circumstances. Specialised lenders adopt a personalised approach, delving into each case intricately, leveraging their expertise to provide bespoke mortgage solutions for individuals with intricate financial backgrounds.

Can I get a joint mortgage if one of us is self-employed with bad credit?

When evaluating your mortgage application, lenders will assess not only your credit history but also your partner’s. Most lenders aggregate both credit scores, expecting applicants to meet their prescribed minimum score threshold. Hence, if one partner possesses a commendable credit rating, is employed full-time, or meets certain criteria, it can significantly favor your application.

Approval of your application hinges upon the gravity of any credit file issues and the substantiation of your income. Lenders seek details such as the timeline of the issue, the financial magnitude involved, and the efforts made to rectify the situation. For instance, instances like bankruptcies and payday loans are viewed less favourably compared to sporadic missed payments.

It’s crucial to note that in joint mortgages, responsibility isn’t divided; both parties are jointly accountable for the entire debt if one person defaults. Joint debt entails equal liability for both parties involved.

Informing your mortgage broker about any adverse credit history before initiating the application process is advisable. Our Mortgage Experts maintain a non-judgmental stance and possess comprehensive experience. By openly disclosing any factors that could impact your application, they can navigate through available options and pinpoint lenders more inclined to approve your application.

Can I remortgage if I’m self-employed with bad credit?

Indeed, remortgaging while self-employed with bad credit is entirely feasible. The remortgage application procedure closely mirrors the initial application, necessitating comprehensive evidence of income and identifying a mortgage lender accommodating applicants with adverse credit.

Several mainstream lenders view a poor credit score as indicative of inadequate credit management. Coupled with a less predictable income stream of self-employment, they may opt to avoid the associated risk. However, it’s a misconception that seeking a remortgage as a self-employed individual with bad credit guarantees an outright rejection. Instead, it often necessitates exploring specialised avenues.

Specialist lenders delve into mortgage applications diligently rather than dismissing them outright based on credit scores or unconventional working patterns. The specialised mortgage market operates discreetly, commonly inaccessible directly to borrowers. These lenders refrain from advertising their services, engaging exclusively through specialised mortgage brokers equipped to assist individuals navigating complex financial situations.

Are self-employed bad credit mortgages as good?

The prospect of securing a mortgage from a non-mainstream institution may evoke skepticism. However, it’s important to note that specialist mortgages adhere to the same regulatory standards as those from mainstream lenders. Their relative obscurity stems from their specialisation.

When applying for a self-employed mortgage with bad credit, any lender conducts a comprehensive ‘stress test’ to assess your repayment capacity. They simulate unforeseen scenarios to gauge if you could sustain mortgage payments under adverse circumstances. Specialised lenders, employing human underwriters, scrutinise applications even more diligently to ensure the safety of extending credit.

Despite advancements, a certain stigma persists regarding credit issues. Individuals may encounter financial setbacks due to various reasons such as job loss, illness, or overlooked fines. Many of our clients have diligently worked toward financial improvement, yet faced rejection from mainstream lenders before turning to us. We aim to highlight the presence of specialist lenders, enlightening more individuals about the array of alternative options available.

Self-employed bad credit mortgage brokers

Securing mortgages for self-employed individuals with bad credit, though challenging, remains plausible. However, the most effective approach to discovering an ideal mortgage arrangement is through collaboration with a specialised mortgage broker. Our adept Mortgage Experts possess an intimate understanding of the mortgage landscape, fostering strong connections with various lenders. They dedicate themselves to sourcing the most suitable deal at favourable rates, significantly enhancing the likelihood of your application’s approval.

  • Can I still qualify for a mortgage if I have bad credit as a business owner?

    Yes, it's possible to qualify for a mortgage with bad credit, but it might be more challenging. Some lenders specialise in working with individuals with lower credit scores or unique financial situations.

  • How does bad credit affect my chances of getting a mortgage?

    Bad credit can impact your mortgage application by making it harder to qualify or leading to higher interest rates. Lenders typically assess your credit score to determine your creditworthiness and may be more cautious with applicants who have lower scores.

  • What can I do to improve my chances of getting a mortgage with bad credit?

    To enhance your chances, consider options such as working with specialised lenders, offering a larger down payment, finding a co-signer with good credit, or taking steps to improve your credit score over time by managing debts and paying bills on time.

  • Are there specific mortgage programs or options available for business owners with bad credit?

    Yes, some lenders offer specialised programs or products tailored to business owners with bad credit. These options might have different qualifying criteria or terms compared to traditional mortgages, so it's advisable to explore these options with mortgage brokers or financial advisors.

Conclusion

It’s not impossible to get a mortgage with bad credit. Speak to one of our expert advisers today and we will find the best rate for you. 

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