How We Can Buy House Without Deposit Even Have Bad Credit Score

Listen to this article

Buying a home in the UK is a serious responsibility. However, it is something we all want. After all, owning a home is one of the best achievements in our lives.

With that being said, it must be probable that you are looking for a mortgage now. In most cases, buying your home with money from savings is quite a difficult task for most people. Quite plainly, the money included in buying a home usually comes in a huge amount. You may not be able to bear such high amounts only with your savings. Hence, the mortgage.

However, you are reading this blog because you want to buy a house with no deposit and a bad credit score. Without having to pay deposits in the beginning, mortgages might be possible easily. However, does a person get the same kind of benefit when there is a bad credit score? The answer is ‘yes’. We can justify it in the rest of this post.

• Let Us Learn How a No-Deposit Mortgage Works

We can find the values of the no-deposit mortgage when we understand something called the LTV mortgage. Known as the Loan-to-Value Mortgage, it makes enough sense when we want to get the full money based on a home’s valuation from a respective lender without having to pay any initial deposits. Simply put, a no-deposit mortgage becomes a 100% LTV mortgage as the lender will pay the full amount of money to the borrower.

Does it mean they don’t offer the full valuation of the property when you look for a mortgage? Well, usually, you pay a percentage of the property’s financial value to your lender. In the UK, you might be asked to pay 5% of the property’s value to your lender in order to gain the rest 95% of the value as a mortgage. In a way, this loan is considered a 95% LTV mortgage.

When speaking of the no-deposit mortgage, we are looking at a 100% LTV mortgage. It is one of the most effective options if you want to borrow the purchase price of your new home in full.

Nevertheless, a 100% LTV mortgage is one option that does not come with lenders very easily. You may not also find it with every lender. Besides that, a poor credit score can make the opportunity for gaining a loan a little narrower.

With all that being said, there are ways to buy a house with no deposit and a bad credit situation if you know where to look and what precautions to take to get the solution you are looking for. Now that you understand what a 100% LTV mortgage is and how it translates to a no-deposit mortgage, we can look at the following point to learn more about it.

• How to Take out a No-Deposit Loan in a Bad Credit Score

Sure, you may have thought that there are no-deposit mortgages out there. However, the presence of a bad credit score might have made borrowing more complicated for you.

In the following points, you will find some ways to get your loan product without providing a deposit value.

• Look for a Mortgage Broker

As a matter of fact, a 100% LTV mortgage is something you need to take care of by expert hands. Now, you may not always have the expertise and, more importantly, the insight into the industry to find a mortgage in that way. Brokers can help.

A mortgage broker is a secured loan mediator who works with direct or specialised lenders who provide these loans. A broker can stand by your side and advocate for a 100% LTV mortgage. In most cases, mortgage brokers are able to find the loan you are looking for because they work using a wide network of lenders. Therefore, they can get more than one lender to help you out with a bad credit score. Besides, the brokers use a strategy called the ‘whole-of-market’ approach, which may find you a no-deposit loan in a very short time.

Mortgage brokers work with authentic lenders only. Therefore, you might also save yourself from loan sharks or other fraudulent activities.

• Look for a Joint Mortgage

Also known as mortgages for shared ownerships with bad credit scores, a joint mortgage often makes sense when you want a mortgage with a low credit score. However, it is also important to know that you have to speak to authentic mortgage brokers for 100% LTV mortgages this way.

In this way, you can take out a loan easily with a bad credit score. Most lenders will allow from 2 borrowers to 4 borrowers. However, for the said LTV percentage, do have a word with your broker at the right time.

• A Stable Income Can Help to Get a Mortgage with Bad Credit and No Deposit

A loan might come in many ways. However, UK lenders prefer lending to borrowers with bad credit scores if they have a good income statement and that too if the income alone can pay off the repayment terms.

A mortgage is a large amount of money included in the terms. Therefore, the mortgage borrower needs to supply the lender with an evidential income statement so that the lenders can run a check on the loan affordability part and approve the deal for you fast.

To Conclude

Updating your credit score makes more sense when you want to get a no-deposit loan with bad credit. Whatever low or poor your credit score might be, you can update it with the help of your credit card provider. You may also make it more relevant when you check the score yourself to find flaws and rectify them.

When taking out this loan or you intend to do so, all you need to find is a way of maintaining the repayment. This can be clear to you if you understand your capabilities and the value of your home. Take the help of a real estate agent to find more clarity regarding this matter.