Will my partners bad credit affect a joint mortgage application?

Will my partners bad credit affect a joint mortgage application?

 

If you’re looking to apply for a new mortgage with a partner, you will have the option to apply individually (as a single applicant) or as a couple (joint applicants). Why, then, would you want to leave your spouse off the application form? Annoyingly for some, lenders usually won’t average out your two credit scores (or rely on the highest) when figuring out your creditworthiness as a team – they pay the most attention to the lowest credit score. If your credit rating is pristine but your spouse’s is at rock bottom, it’s highly likely that a joint mortgage application will be denied.

Lenders also study your debt-to-income ratio (DTI), which contrasts the total amount you owe each month with your earnings, in order to determine your eligibility. If your partner has a considerable amount of debt compared to their income and the mortgage is a joint application, then there’s a strong chance it will be denied. Even if your joint mortgage application is approved, your partner’s weak credit score or high DTI could leave you with a heftier interest rate payment than if you’d applied as an individual.

Joint mortgage – one partner has bad credit.

With a loan as massive and as long-lasting as a mortgage, a higher interest rate can end up setting you back you tens of thousands of pounds or more over the lifetime of the loan. But the good news is that some providers of bad credit mortgage loans may be able to help you out. Thankfully, lenders place a different weight on the criteria they use. Some prefer to put more emphasis on factors other than your credit score, such as debt-to-income. Therefore, if your partner has a low debt-to-income ratio, it may help to outweigh their credit problems.

Another approach that could reduce the damage caused by their poor credit could be to stump up a larger down payment, which demonstrates to the lender you don’t need to borrow as much. In addition, many providers of bad credit mortgage loans offer schemes for first-time buyers that are typically slightly more lenient when it comes to evaluating credit criteria. For instance, many can provide solutions to customers with CCJs, IVAs or defaults.

Some bad credit mortgage loans providers offer other varieties of first-time home buyer mortgages. The UK’s Help to Buy mortgage deposit scheme may also be worth looking into, as it enables you to borrow up to 20% of the house’s value from the government to add to your mortgage deposit. Several factors determine your eligibility, so you’ll need to understand these before applying.

My partner has bad credit, can we get a mortgage?

Yes, it will make things more difficult and affect the rates offered to you. It is still possible to get good interest rate even if one person has had previous bad credit.

It is highly likely that because of the bad credit you won’t pass the high street lenders internal credit score. With the help of a mortgage expert they can find you the best possible deal for your circumstances.

If you have bad credit, best advice is to obtain a credit report, you can do this by clicking here

What types of bad credit can affect a joint mortgage application?

This can be anything that is showing on your credit report. Also, if you are still financially linked to an ex-partner who has bad credit. Below is an example of what could be affecting your credit score and chance of being accepted.

  • Defaults
  • CCJ’s
  • IVA’s
  • Bankruptcy
  • Repossession
  • Low credit score
  • Missed payments
  • Debt relief order
  • Debt management plan
  • Financially linked to another person

Speak to a bad credit mortgage adviser.

There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or can’t borrow what they need – just because one lender has declined you, don’t give up.

Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.

The expert brokers we work with have experience in dealing with all aspects of bad credit mortgages, and importantly using the whole of the market to access the very best deals available.

To find out how we can help call us on 0300 124 5655 or complete our quick enquiry formto speak to a mortgage expert.

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