Can I get a mortgage with a good salary but bad credit?

If you’ve recently had a promotion (well done) you may be wondering if you can get a mortgage with a good salary but bad credit history.

This can mean that while your future is looking good, your past credit problems are holding you back when it comes to stepping on the property ladder.

We’ve already explored credit history in an earlier blog and how it can affect your mortgage application. You’re not alone, by the way, as the latest stats show that almost 1 in 5 people have a poor credit score.

But even if your finances are getting stronger thanks to a higher salary, your credit score can still weigh heavily on your chances when it comes to mortgages.

The good news is that all’s not lost. But you have to be prepared to carry out a few tasks on your finances to increase the chances of securing a mortgage deal.

How credit scores affect your application

When lenders first look at mortgage applications, they will check your credit history before anything else. People with bad credit history are seen as a risk to lenders so they check your score first.

But there are lenders who specialise in mortgages for those with a poor credit history. Before you make any applications, remember that any rejections could affect your credit score. We suggest you speak to a mortgage broker first for advice as that won’t affect your score and you’ll be better prepared.

Getting a mortgage with a good salary but bad credit

To secure a mortgage with a good salary but a bad credit score be prepared to increase your deposit. As we have mentioned, a number of mortgage lenders are happy to approve a deal to those without a perfect credit history. But you will need a deposit.

If you have no deposit, then it will be more difficult to secure a deal. That’s because lenders protect themselves from high-risk borrowing. If that’s the case, give yourself time to put cash from your increased salary into a little nest-egg so you will have a deposit.

You need a decent deposit because the more you have, the less mortgage you will need. Lenders see that as a positive and will deem you a lower risk. It will also mean you have more equity in your property and your mortgage will be more affordable.

Set up a savings account with a good interest rate and start putting away an affordable amount each month to build up your deposit.

If you’re searching for a mortgage deal with poor credit history, be prepared to pay more in interest. The higher rates offset the risk that lenders take in offering you a mortgage.

What else can I do?

The deposit really is fundamental to your chances of securing an affordable mortgage deal. There are a number of other steps to take to help increase your chances. These include:

• Check your credit report: You may know you’ve got debts and poor credit history, but what is your score? Credit check companies, such as Experian, offer free checks with affecting your score.
• Reduce your debts: Lenders will look at your debt-to-income ratio. If you can make your debts lower while receiving your higher income, this will be seen as a positive when it comes to your credit score.
• Consider a guarantor: You could speak to a member of your family or close friend with good credit. If they are willing to act as a guarantor, it increases your chances of securing a mortgage. It means if you default, they will be responsible for your mortgage payments.
• Use a mortgage broker: A mortgage broker, such as The Mortgage Dog, can access deals you can’t through comparison sites and high street lenders. And that includes specialists who lend to those with poor credit history. Brokers also look at your entire financial situation to help you increase the chances of securing a deal.

What to do next

If you’re looking for a mortgage with poor credit history speak to our experienced team. We will help guide you so you increase your chances of a mortgage approval.

Your home may be repossessed if you do not keep up repayments on your mortgage.