One of the things we hear often from people calling up is that they do not believe they can get a mortgage but are just calling in hope.
Like any applicants it really comes down to the bad credit you have. Being a first time buyer can hinder your options in certain circumstances which I will go in to but it is not usually a deal breaker.
First time buyer with bad credit
When we speak to anyone with bad credit we are looking for a few things:
- The LTV (which is the loan amount as a percentage of the purchase price),
- What adverse you have (and when it was registered).
These 2 will help us determine the type of lender available. Lenders fall into 3 categories:
- High street lenders,
- Building Societies,
- Specialist bad credit lenders.
Where does it differ between home movers and first time buyers?
If you are a first time buyer with bad credit, you do not have a history of making mortgage payments showing on your credit report. Making mortgage payments on time can help to overcome some minor and/or historic adverse with high street lenders who credit score.
It could also play a part with building societies. The answer to this is a little more complicated but lets try to explain…
With building societies, they tend to look at everything on an individual basis. If you have had some bad credit but can show you have been making mortgage repayments they are likely to look at that more favourably than someone who has lived at home. However it is not just limited to mortgage repayments, it would also be the same for someone who has been renting.
Where it would be the same
Following on from the section above regarding building societies. If you have been renting, the building societies may look at you in a similar light to a home owner. They can obtain a reference from a landlord or check bank statements to show rental payments for instance.
Finally with specialist bad credit lenders you would expect to be treated the same regardless of whether you are a first time buyer or not. Simply, this is because their criteria tends to be a lot more black and white. This means you either fit criteria or you do not. If you do fit criteria then we would expect to receive an offer.
A first time buyer would usually be treated in line with a home mover. There are some exceptions to that but it is generally only where the adverse is minor or historic.
Examples would include:
- adverse that is over 3 years old or,
- nothing more than maybe 1 or 2 Defaults for say £50-100.
However as a broker which specialises in bad credit we have many first time buyer customers we have been able to help over the years. We have been able to get some of them normal rates on the high street. Others have ended up with the specialist lenders. The devil is very much in the detail, so it is worth getting in touch so we can have a chat and get some details.