How much deposit do I need?
The minimum deposit requirement for a residential property in the UK is 5% or 15% for a buy-to-let, but if you have adverse credit, some providers will only offer you a mortgage loan if you put down more deposit, depending on the age and severity of the issue.
For example, those with a repossession on their credit file may be able to get a property loan from specialist firms within 1–3 years if they put down a 25% deposit.
Those with an individual voluntary arrangement (IVA) will need between 10-25% deposit, depending on how long is left to run on the debt, and those with a bankruptcy will need between 15-25% in the first three years.
5 – 10% deposit
It may be possible to get an LTV (loan-to-value) between 90 and 95% with minor bad credit (some lenders will allow a mortgage with defaults if the default is for a mobile phone for example), as long as you meet the provider’s other eligibility requirements.
However, you might struggle to get a mortgage with severe adverse, such as bankruptcy or repossession, history as these issues usually call for a larger deposit amount to offset the risk, especially if they’re less than three years old.
That isn’t to say it’s impossible to get a great loan-to-value with these issues against your name, but specialist advice will be essential.
You might struggle more if you have severe adverse, such as a recent bankruptcy, repossession or IVA.
It may be possible to find a provider willing to offer you a 50% loan-to-value with bad credit, as a deposit this substantial will offset the risk involved in the deal.
You will still need to pass all of the standard eligibility and affordability checks, but a deposit of this size will certainly help your cause.
100% mortgage / no deposit
This will prove difficult as 100% mortgages are not typically offered to customers with bad credit, or anyone else, for that matter. One of the only ways to get a residential loan with no deposit whatsoever is by having a family member or close friend act as a guarantor.
With a bad credit guarantor mortgage (also known as bad credit family springboard products), the lender will secure the loan against a property your guarantor owns or against their savings, as this security can serve as an alternative to a deposit.
The process for securing this loan with bad credit is the same as applying for any other kind of property loan under these circumstances. If a provider considers you too high risk due to your adverse, having a guarantor is unlikely to change their mind on that.