Bad Credit Mortgages in Scotland

If you’re looking to buy a property in Scotland but have a poor credit record, you can still get a mortgage. You may face a few extra obstacles.

In this guide, we’ve included everything you need to know, including how to boost your chances of getting your application approved, what deposit you’ll need, and how a broker can help.

Read on for more information, or jump to the relevant section via the links below…

Can you get a bad credit mortgage in Scotland?

Yes. However, you may be limited in the number of lenders who’ll consider you for a mortgage and the rates on offer.

Some providers will turn you down straight away if you have an unhealthy credit history and you don’t meet their criteria. However, plenty will consider your application, including high street names and specialist lenders operating in Scotland and nationwide.

You may also find you end up paying more for your mortgage. If a lender considers you a risky borrower, they’ll want to balance out the risk of lending to you by charging you a higher rate.

However, some mortgage brokers specialise in arranging bad credit mortgages for people who are buying in Scotland, and they could help you get a better deal.

What credit issues will lenders in Scotland accept?

‘Bad credit’ is a wide-ranging term that covers a whole host of circumstances. Every lender in Scotland and the UK will carry out a credit check before approving an application. Any of the following on your record could raise a red flag:

Missed payments or defaults

Missed loan, mortgage repayments, or defaults will create a black mark on your credit history. But don’t panic. It’s still possible to get a mortgage with these on your record. Lenders may ask for a detailed explanation of the circumstances, or, in some cases, you may need to use a specialist lender.

It’s worth noting that some missed payments are considered more serious than others. For example, lenders may be more reluctant to lend to you if you’ve missed mortgage or other secured loan payments than if you’ve skipped a payment on an unsecured loan or a mobile phone contract.

Decrees

Decrees are the Scottish equivalent of County Court Judgements (CCJs) in England and Wales. When assessing your mortgage application, lenders will consider when you received the decree and how big it was.

If the decree was registered more than two years ago, it will likely be ignored. However, lenders will apply their own specific criteria, and some will be more willing to accept applicants with decrees than others. A specialist bad credit broker can advise you on which lenders to approach.

Individual Voluntary Arrangements (IVAs)

If you’re currently in an IVA, you’ll unlikely get approved for a mortgage in Scotland. After an IVA, however, it’s possible. You may struggle to be accepted by a mainstream lender, but plenty of specialist providers will consider your application.

Lenders will consider how long ago you entered the IVA (after 6 years, IVAs are removed from your credit file) and the circumstances surrounding the IVA.

Sequestration

Sequestration in Scotland is equivalent to bankruptcy in England and Wales. If you’ve entered sequestration, you’ll struggle to get a mortgage. Some specialist lenders will consider you after you’ve been discharged from sequestration, typically 12 months after the court made the order.

Although it’s possible to secure a loan from a specialist lender, your choice of deal will be limited, and you should expect to pay higher interest rates and fees.

Details of your sequestration remain on your credit file for six years, so lenders may view your application more favourably if you apply after this period.

No credit history

Although not strictly an example of ‘bad credit’, having no credit history can be just as problematic when getting a mortgage. If you have no credit score, lenders can’t determine how good you are at repaying debt and, therefore, how risky you are as a borrower.

However, it’s still possible to get a mortgage. You’ll need the help of a specialist broker who can advise which lenders will best suit your circumstances.

How to get a Scottish mortgage with bad credit

There are certain things you can do to improve your chances of getting your application approved if you have bad credit. These are three steps you should take:

Check your credit report

Before you even think about making an application, you should check your credit report. You should make sure all the details are accurate and that you’ve been delinked from anyone you previously had joint accounts with. If there are any errors on your report, you have the right to challenge them or, at the very least, add a note explaining any late or missed payments.

You can download your credit reports through our dedicated credit reports hub.

Speak to a specialist broker

You should always seek advice from a specialist bad credit broker if you have bad credit. They’ll be able to review your situation and advise whether it’s the right time to apply for a mortgage.

If it is, they can tell you which lenders in Scotland to approach and which to avoid. Many Scottish lenders won’t consider you if you have bad credit, so a broker who’s an expert in your specific area of concern can save you the stress and expense of wasted applications.

They can also secure the best rates, negotiate with lenders on your behalf and get access to exclusive deals.

We have brokers in our network who specialise in all types of bad credit mortgages in Scotland. Get in touch and we can arrange for an expert to contact you directly.

Build up a deposit and save extra if possible

It’s hard enough to secure a mortgage with a small deposit in normal circumstances. If you have bad credit, it’ll be even harder. That’s why it’s a good idea to build up as big a deposit as possible. If you approach a lender with a large deposit, you’ll be considered less risky and have a better chance of getting approved and paying a more competitive rate.

Eligibility criteria

Scotland has no specific criteria for bad credit mortgages compared to England. Whether or not you get approved will depend on several factors, including:

The cause of the bad credit

Lenders will generally be more lenient if you missed a few mobile phone payments than if you’ve entered sequestration or defaulted on a mortgage repayment.

How long ago the bad credit event occurred

If the event happened a long time ago and you’ve taken steps to improve your financial situation, you may be viewed more favourably by lenders.

Whether the issue was a one-off event

If you’re a repeat offender, you’ll probably find it harder to accept your loan.

The size of your deposit

The bigger the deposit, the better, as lenders deem you less risky. Applicants with poor credit typically need a deposit of at least 15%. If the credit issue is more serious, for example, if you’ve entered into an IVA or sequestration, you may be required to put down as much as 40%.

What you earn now

If you have a stable and regular income and can prove that you’ll be able to pay your mortgage repayments, you’ll be viewed more positively by lenders.

Does where you live in Scotland make a difference?

Where you live in Scotland shouldn’t affect your chances of getting accepted. It’s worth noting, however, that some lenders don’t lend to applicants in certain regions, such as the Highlands or away from the mainland. If you live in these areas, you’ll probably need the services of a specialist lender.

Connect with a broker in Scotland who specialises in bad credit

Getting a mortgage if you have bad credit can be challenging but is far from impossible, especially if you seek advice from an advisor with experience dealing with your specific issue and in-depth knowledge of the Scottish market.

They’ll be able to match you with the perfect lender for your circumstances and help you through the application process.

We work with brokers with a track record of helping borrowers in Scotland with bad credit secure a mortgage. Call 0330 822 0505 or make an enquiry to get matched with an expert today for a free initial conversation.

We hand-pick all the advisors in our network and rigorously vet them so you know you’re getting the best possible advice.