Getting on the property ladder with a poor credit history can be tough. Here are some ways to improve your chances of getting a mortgage with bad credit.
Having a poor credit history makes you a riskier option in the eyes of mortgage lenders, and can affect:
When you apply for a mortgage, the lender will run a check on one of these databases to see your credit history:
This credit report shows the lender your past and current credit commitments, and the way you’ve managed them.
Your outstanding credit, other outgoings, income, and number of dependants, will help them assess your affordability, and affect the amount you could borrow.
You can find out more about credit checks, credit scores and your credit check rights in our guide: How to check your credit record.
There are things you can do to boost your credit rating and improve your chances of being approved for a mortgage:
Getting a mortgage with bad credit is more difficult, but there are steps you can take to improve your chances.
Research different lenders’ lending criteria and choose one that’s less strict.
For example, Finance Ireland is more flexible around previous credit issues, but they don’t offer a quick fix.
Arrears on unsecured loans must be more than two years ago, and more than four years ago for secured loans.
You could use a mortgage broker (mortgage credit intermediary) who has a good knowledge of the main lenders and their criteria, to find you a suitable lender.
This is likely to save you time, and avoid additional credit checks that can damage your credit record further.
Too many credit checks in a short space of time raises the alarm to other lenders as it shows you’re struggling to get credit.
The Rebuilding Ireland Home Loan is a mortgage scheme that can make buying a home more affordable for first time buyers, providing you meet the eligibility criteria.
One of the key criteria is proving that you have been declined for a mortgage by two banks or building societies.
The two fixed rate mortgage options lasting 25 or 30 years, make it easier to budget for your payments, as they won’t change for the entire mortgage term.
To apply for the Rebuilding Ireland Home Loan, you’ll need to complete an application on the Rebuilding Ireland website.
The more you can save up, for example by reducing your spending, the easier it will be to apply for a mortgage.
Our mortgage deposits guide has tips to help you cut costs and save for a deposit.
Don’t apply for a mortgage or approval in principle until you’ve done your preparation.
Here’s how to prepare for a mortgage application.
Waiting for as long as possible to apply after clearing any arrears, could increase your likelihood of getting:
A cheaper interest rate will make payments more affordable, and you could even overpay your mortgage.
If you’re approved for a mortgage, make sure you can afford the payments long term. It’s likely you’ll have been offered a high interest rate product which will increase the cost.
If you choose a fixed rate mortgage, your payments will stay the same but if it’s a variable rate mortgage, your payments could go up as well as down.
An interest only mortgage is cheaper, but may only be suitable in the short term as you only pay off the interest, not the capital.
If you do go ahead and borrow, make sure you have the right mortgage protection and other insurances for your mortgage.
Find the best first time buyer and home mover mortgage deals in Ireland using our comparison.
Bad credit is usually caused by missing payments or making late payments on your credit agreements e.g. loans and credit cards.
Our guide: How to check your credit record covers more on this and credit scores.
If you miss any mortgage payments and can’t catch up, your mortgage will go into arrears.
As soon as you know you’re in financial difficulty, you should contact your lender or the Money Advice and Budgeting Service (MABS).
They can offer free, independent advice and help you to understand the next steps.
Never ignore the problem as you could face losing your home.