Last reviewed on 14th July 2023 by Martin Alexander (Mortgage Advisor)

Applying for a joint mortgage may seem confusing, especially if one applicant has bad credit. It’s common for couples to try and get a mortgage solely with the applicant who has good credit, but most lenders simply won’t allow this.

If you’re married, most lenders insist that a joint application must be made. Bad credit can vary quite considerably, and there are specialist lenders tailored for these exact circumstances.

If you require a joint mortgage with bad credit, it’s always best to declare the credit problems you’ve encountered. Our advisors can then assess your situation to provide accurate advice and only approach the most suitable lenders.

This article covers various scenarios involving joint mortgages with bad credit. If you’re still unsure of what to do, you can make an enquiry, and an advisor will call you straight back.

What do lenders look for on a joint mortgage with bad credit?

It’s important first to understand what lenders look for when applicants apply for a joint mortgage. We’ll then discuss the bad credit aspect further to give you a greater understanding of how it all comes together.

When applying for a joint mortgage, lenders will want to establish the following for each applicant:

• Relationship of applicants (cohabiting, married, family)
• Single or joint names
• The ages of each applicant
• Experience of each applicant (first-time buyers, investors, etc)
• Employment status (working, self-employed, contractor, etc)
• Income for each applicant
• The amount of credit currently outstanding (if any)

Lenders will also assess the mortgage you’ve applied for. For instance, having a large deposit of around 35% or more will offer more incentive for lenders to say yes. If you have a smaller deposit, such as 5%, lenders will be more reluctant to offer you a mortgage. Mortgages with small deposits may be deemed too high risk, as one joint applicant has bad credit.

The majority of lenders prefer married applicants to take joint mortgages. The main reason is that joint applications provide more security for the lender. The problem can arise when one applicant has bad credit and is declined a mortgage. Fortunately, there are a handful of lenders that will accept sole applicants, even if an applicant is married. Such lenders will base their decision on the affordability of the sole applicant.

How can bad credit affect a joint mortgage application?

A credit search will always be made when applying for a mortgage. Credit agencies have a duty to reflect the conduct of an individual on how they manage credit. As a result, lenders will always check an applicant’s credit file prior to mortgage approval. Let’s take a look at the types of adverse credit that can pose problems for joint mortgages, even if one applicant has a great credit score.

One applicant may have one or a mixture of the following:

• CCJs
•  Late payments/arrears
•  Defaults
•  DMP (Debt Management Plan)
•  IVA
•  Bankruptcy
•  Repossession

What if the credit issues took place a long time ago?

The credit issue’s severity and how recent it was will impact whether or not you’re approved. A lender will generally only see the last six years of your credit report, so if you have historic credit issues, they shouldn’t affect your application.

If you’re part of a Debt Management Plan, lenders will assess how you’ve managed your repayments. You may still have to declare whether or not you’ve previously been made bankrupt or had an IVA. If you or your partner have had such issues, then certain lenders simply won’t lend. Don’t panic, as other lenders may still offer you a mortgage.

Other factors lenders will take into consideration are:

• The type of credit issues and severity
•  How recent were the credit issues?
•  The reasons for your credit issues (one-off or repetitive)
•  The amount of debt involved
•  Whether or not the credit issues have been resolved/satisfied
•  The type of credit involved (credit card, mortgage, utility bill, etc)

What if one applicant has great credit and the other has bad credit?

Each lender has a unique scoring system. As a result, there isn’t one answer that fits each lender’s criteria. Lenders each have policies on adverse credit and how they process joint mortgages. Furthermore, lenders also vary on whether or not they’ll accept one applicant instead of two.

If there are two applicants, one with great credit and one with bad credit, some lenders will base their decision on the lower score out of the two. This can be frustrating as the applicant with great credit has little bearing on the overall decision made by the lender.

Other lenders may assess joint applications together rather than basing their decision on the lowest credit score. Such lenders operate a scoring system to assess both good and bad credit scores to calculate an overall credit score.

If the joint score meets their average, then the credit part of the assessment will pass. If the joint score doesn’t meet the lender’s average, then the joint application will fail.

Some lenders may see past a low credit score if one applicant has a good credit rating. However, a good credit rating can still be declined. For instance, an applicant may have a great credit score but has recently used payday loans and, as a result, could fail the application. In another scenario, an applicant may have a low credit score but meets the rest of their policies, so the application is approved.

What if both applicants have bad credit?

It’s difficult to get a mortgage when both applicants have adverse credit. That said, it all depends on how severe the issues are and how recent the credit issues were. A lender may decline anyone who’s had a CCJ in the last 12 months, whereas another lender may approve an application.

Certain lenders may be more cautious if a credit file shows defaults, and other lenders simply won’t lend if you’ve been repossessed in the last three years. On the other hand, some lenders will accept both of these credit issues.

Our advisors also work with specialist lenders. For instance, most high street lenders won’t approve applicants who have late payments on their credit files.

Specialist lenders will consider mortgage approval on more serious adverse credit issues like bankruptcy. That being said, most specialist lenders will only offer deals through brokers.

Speak to an adverse credit specialist

Joint mortgages can be confusing for borrowers. Once you throw bad credit into the equation, it becomes a minefield. Trying to approach lenders yourself to get a mortgage is based on luck, and if you are declined, it can damage your credit file further.

Our advisors understand lender criteria and are experts in adverse credit. If you need a joint mortgage with bad credit, you will need a specialist broker.

Trying to tread carefully in the hope that your mortgage is declined isn’t a smart move by any means. You can make an enquiry below and let our advisors do all the hard work for you.