There are many potential advantages to applying for a joint mortgage. If both applicants have a good credit history and are currently in a comfortable financial position, joint mortgages can be extremely competitive by way of interest rates and overall borrowing costs alike.
Unfortunately, things become a little less straightforward when one of the applicants has a low credit score. If you have any questions or concerns regarding your eligibility for a mortgage due to your credit history, it is essential to address them before applying.
Organise a consultation with an independent broker to discuss the available options, along with the best course of action to suit your requirements and your budget.
Lender Considerations with Bad Credit Joint Mortgages
Gauging the eligibility of a single applicant is relatively simple for most lenders. By contrast, working out the combined eligibility of a couple is something else entirely. Particularly where one (or both) applicants have credit issues, assessing eligibility for a mortgage can be a long and complex process.
In terms of the specific criteria and measurements most lenders focus on, your joint application will usually be considered by way of the following:
- Your relationship with your partner
- How long you have been together
- Your ages at the time of the application
- Employment status and income level
- History of employment (in your current post)
- Both of your outstanding debts
- Your current individual credit scores
- Existing assets and property ownership
Along with these criteria, your application will also be considered in accordance your requirements and preferences. This will include the amount of money you intend to borrow, along with your preferred repayment period. Your eligibility may also be affected by the size of the deposit you are able to provide.
If you cannot offer a down payment of more than 5% or 10%, any credit issues on your file (or that of your partner) may stand in your way. By contrast, a down payment of 35% could significantly increase your likelihood of qualifying for a competitive deal.
Can I Apply Alone?
Though there are exceptions to the rule, the vast majority of lenders are only willing to accept mortgage applications from married couples as joint applications. You therefore may not have the option of applying for a mortgage as a sole applicant, if you are either married or joined by way of a civil partnership.
If you wish to apply alone, you will need to consult with an independent broker and find a specialist lender away from the UK High Street. In which case, your eligibility will be determined entirely on the basis of your own credit history and financial position – your partner’s will not be taken into consideration.
What Types of Bad Credit Can Impact a Joint Application?
Most of the same rules and restrictions apply as those that concern standard mortgage applications. The nature, extent and recentness of the credit issues will ultimately determine the outcome, with lenders examining credit histories for evidence of the following:
- Late Payments
- DMP (Debt Management Plan)
Each of these can and will have an impact on your credit history. Though it is important to note that an issue on one applicant’s credit report could easily be augmented by one or more positive factors on the other’s.
If one applicant has simply missed a couple of utility payments over the years but the second applicant has a practically flawless track-record, the joint application is likely to be accepted. Likewise, if one applicant has an imperfect credit history while the second has vast on-hand assets and evidence of an enormous salary, the same applies.
As this can be difficult to establish beforehand, it can be helpful to discuss your case with an independent broker to establish your joint eligibility, should you choose to go ahead.
What If the Credit Issues Took Place a Long Time Ago?
All issues reported on your credit history remain visible for a period of six years. After which, they will be erased from your record entirely.
You may also find that some lenders are more willing to overlook older credit issues than others. If you simply missed a few payments five years ago and have subsequently managed your debts flawlessly, you may be considered eligible.
At the opposite end of the scale, you may still be required to declare issues like bankruptcy or IVAs after they are erased from your credit history. This does not necessarily mean that they will stand in your way of qualifying for a mortgage, though could impact the competitiveness of the deal you are offered.
Anyone (individual or as part of a couple) considering a mortgage application after declaring bankruptcy should seek independent broker support at the earliest possible stage. As most major banks and lenders are unwilling to consider applicants with a history of bankruptcy, you are unlikely to find the support you need on the High Street.
What if Both Applicants Have Adverse Credit?
Irrespective of whether one or both applicants have adverse credit, it is the nature and extent of the credit issues that will determine the outcome. Qualifying for a mortgage can be more difficult with credit issues on both files but will not necessarily exclude you from consideration.
Specialist lenders are often willing to consider ‘subprime’ applications by way of their individual merit. Even if both applicants’ credit scores are less than ideal, it is still possible to qualify if everything else is in place. Employment status, current financial position, proof of income, sizeable down payment, existing assets and so on – all taken into account by the UK’s more accommodating specialist lenders.
As many of these lenders are only available via established brokers, you will not find them on any UK High Street. Organise an independent initial consultation to discuss the available options, ensuring your requirements are paired with an appropriate lender who will give your application fair consideration.