Louise, a mother of three, had never imagined she could secure a mortgage due to her poor credit history. However, after moving into her first family home, the 43-year-old is now encouraging others facing similar challenges not to lose hope.
Six years ago, Louise and her husband began saving for a deposit, despite her doubts about their ability to purchase a home given their £15,000 debt and credit file defaults. In the UK, negative marks like missed payments and defaults typically remain on credit reports for six years. Despite having bad credit, obtaining a mortgage is not impossible, but certain factors need consideration.
Individuals with bad credit may need guidance from a specialized mortgage broker, as their options may be limited compared to those with good credit. Approvals from mainstream banks might be challenging, requiring a larger deposit and potentially higher interest rates.
Louise candidly shared with Mirror, “It was my credit that was bad. My husband was fine. I had made some silly decisions when I was younger and had defaults on my credit file, which I knew would stay for six years.” She disclosed the composition of her debt, which included old catalogue credit and credit cards, but emphasized that she is now debt-free.
She acknowledged her past financial missteps, stating, “It was poor decisions on my part. They’re all cleared now – but unfortunately it stays on your credit file.” Despite initial doubts, Louise and her husband, both employed full-time, passed affordability checks for their monthly mortgage payments.
Research by the West Brom Building Society highlighted the nervousness felt by many first-time buyers during the mortgage process, with feelings of overwhelm and lack of understanding being common. An encouraging turn of events occurred when Louise and her husband secured a mortgage approval from the West Brom, overlooking the imperfections on Louise’s credit report.
Reflecting on the journey, Louise expressed her joy at being approved for a mortgage on their £192,000 four-bed home in Prudhoe, Northumberland, with a 5% deposit. The couple is currently on a two-year fixed deal with a slightly above 5% rate, aiming to lower it during the next remortgage.
Despite varying savings while renting, Louise emphasized the importance of perseverance, advising others not to give up due to bad credit history. She reassured, “Don’t give up. Don’t be disheartened. If you’ve got an income but adverse credit, it is possible – it isn’t just a dream. Stay positive.”