How much of a deposit do I need with a low credit score?

How much of a deposit do I need with a low credit score?

Well it depends….. ok not quite the answer you were looking for, but let me try and explain, why you might be better of taking mortgage advice from a mortgage advisor on this one.

Firstly it all depends why you have a low credit score ;

  • You might have a low credit score – simply because you’ve never had any credit and therefore the systems have never ‘rated’ you before
  • Your credit score might be low – because you have a few late or missed payments on a mobile phone bill
  • Your credit score might be low – because you have bad credit  ef missed mortgage payments, defaults, an IVA or previous bankruptcy

…… and that list could go on for quite a few different circumstances.   So  as you can see there is a broad range of why people might have low credit scores and depending on the reason and extent of the low credit score, would depend on which mortgage lenders would lend and thus what mortgage products and what deposit you’d need

How much of a deposit do I need with a low credit score?

To try and put some figures on this,  if its just a low credit score due to lack of credit and issues that are over 2 years bad credit mortgageago, then you might be looking at about 15% – 20% deposit

If its more recent or more significant credit issues, eg defaults, DMP ( Debt Management Plans ) or IVA’s etc  then you are going to be looking at nearer 25%- 35% deposits

But there are lenders out there that don’t credit score at all – see our blog page for more details on that

 

Can deposit be gifted from family?

Yes quite afew lenders allow this, some have restrictions on how much they can gift, but typically lenders would allow upto 50% of the property deposit to be gifted, they generally like you to be putting in at least 10% cash yourself, and they check this by asking you to provide a bank statement showing you have the money , in a savings account in your own name.   So if you have monies in multiple accounts or ISA’s etc, its often better to get them all mved into a main savings account 2 – 3 months before applying for a mortgage , so that when you are asked for proof, you simply have to send in one savings bank account summary showing the amount of deposit in there.

 

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