Bad Credit Mortgage Deposits

Having bad credit can make it harder for you to get a mortgage. You’ll often need a bigger deposit to convince lenders to offer you one.

How big a deposit you’ll need depends on a number of factors, such as the type of bad credit you have, how long you’ve had it, and whether you’ve managed to pay the debt off.

In this guide, you’ll learn how much deposit you’ll need to get a bad credit mortgage, how the type of credit issue you have affects the deposit requirements, and how a specialist broker can help you get the best deal based on the amount of deposit you have.

How much deposit do you need for a bad credit mortgage?

This depends on how bad your credit actually is. Late payments or unauthorised overdraft charges won’t cause you too much of a problem, and you should be able to get a mortgage with a deposit of 5-10%.

But a previous bankruptcy, CCJ or defaulted payments will cause lenders to think twice about accepting your mortgage application, so they’ll ask for a deposit of 30% or more. It’s rare for a lender to ask for a 50% deposit on a mortgage, though.

The main thing to keep in mind is that deposit requirements can vary among lenders, but you can increase your chances of approval with the amount you have by speaking to a broker who specialises in arranging bad credit mortgages.

Deposit size per type of bad credit

The table below reveals how much deposit you’ll need for a mortgage based on the type of credit issue you have and how severe it is.

How a broker can help you

A broker will be completely transparent about what’s in your best interest, and give you exclusive access to the entire market, including specialist lenders and deals that aren’t available on the high street.

This means you’ll have a much better chance of getting approved for a bad credit mortgage, whatever deposit amount you have.

They’ll also guide you through the application process and help you with any paperwork – such as the document you’ll need to evidence you deposit – meaning you’ll be more likely to be accepted first time, and this could help you have time, money and potential marks on your credit report in the long run.

Many brokers operate on a success-only mode, meaning they’ll recover any upfront fees if they can’t find you a mortgage. They usually offer free, no obligation consultations too.

Deposit requirements at specific mortgage lenders

If you have bad credit, the amount of mortgage deposit you need to put down can vary based on the type of credit issue, how long you’ve had it for and the reason behind it, as well as the lender you approach.

Below you’ll find a few examples of the deposit requirements

• Suffolk Building Society will potentially consider customers who’ve had a bankruptcy if they have a deposit of at least 25% and the bankruptcy was satisfied three or more years ago.
• Dudley Building Society will potentially approve a mortgage after a default if the applicant has a deposit of 20%, or lower if the default has been satisfied by the time of application and the total value of said defaults doesn’t exceed £500. The defaults also have to have been issued over 12 months ago.
• Loughborough Building Society will potentially offer mortgages to customers with a history of late payments and just 5% deposit, provided they haven’t missed more than two months of payments within the last two years. There must be a reasonable explanation for the missed payments and the applicant’s account needs to be up to date for the last six months.

This is only a snapshot of the market. Plus, many of the biggest high street banks don’t mention how much of a deposit they require for a bad credit mortgage.

If you approach a lender directly, you could fall foul of one of these restrictions, or any number of others we haven’t been able to fit into this article.

The good news is that a broker will have a view of the entire market and the kinds of requirements each lender has.

How much equity do you need for a bad credit remortgage?

If you have equity in your property but bad credit, don’t worry, You can still be accepted for a remortgage.

Lenders require the same loan-to-value ratio for remortgages as they do for mortgages. Again, how much equity they need depends on the severity of your credit issue, how long it’s been on your file and the reason behind it.

See the table in the deposit sizes section for examples of how the loan-to-value ratio can vary based on the type of bad credit you have.

Get matched with a bad credit mortgage broker

If you’re applying for a mortgage with bad credit, you might struggle to get accepted on the high street, even if you have a decent amount of deposit to put down.

Our broker matching service will take your unique situation into account and connect you with a broker specialising in that area of bad credit.

They’ll be able to tell you which lenders will look more favourably on your application based on the amount of deposit you have, and help you gather all the information needed to make you look like the best possible prospect.

Call 0808 189 0463 or make an enquiry and we’ll set up a free, no-obligation chat between you and your ideal bad credit mortgage broker today.