In this brief guide, we are going to discuss how to get a mortgage with no credit.

Can you get a mortgage with no credit history?

Yes, you can get a mortgage with no credit history but this will require a lot of work in order to prove your mortgage affordability to the mortgage lender. A mortgage with no credit history will also likely require a huge mortgage deposit, a guarantor and will have a higher mortgage rate than comparable mortgages.

Can I get a mortgage with a poor credit score?

Yes, it is possible to get a mortgage with a poor credit score. There are several bad credit mortgage lenders who may be willing to lend to you if you have a poor credit score. If you intend to get a mortgage with a poor credit score you can expect to have to put down a substantial mortgage deposit and expect a less competitive mortgage deposit.

What is your credit score?

Your credit score is a number which indicates your level of creditworthiness. Your credit score is provided to you by the credit bureaus in the UK.

There are four credit bureaus in the UK, Transunion, Crediva, Equifax and Experian.

Each credit bureau calculates your credit score in a different way but all collect the data needed to calculate your credit score from credit providers, in some cases utility providers, government records etc.

If you are unsure of what your credit score is then you should check your credit score from the four credit bureaus in the UK: Experian, Crediva, Equifax and Transunion.

Some of these credit bureaus may charge you a fee to view your credit report so what you can alternatively do is request a statutory credit report which is a free credit report which each credit bureau must provide to you upon you requesting it.

Alternatively, you can also use credit score services such as Checkmyfile and clearscore to check your credit report.

Low credit score vs no credit score

A very important distinction to make is the difference between having no credit score and having a low credit score.

A low credit score means you have had access to some sort of credit and you have mismanaged it, possibly by making late payments, defaulting or even having a county court judgement. By doing this you have damaged your credit score and it is now low.

Having no credit score means you currently do not have any credit footprint in the country in which you reside. This could be due to the fact that you have just moved there (In the UK, it takes 3 years to build a credit footprint) or you have simply avoided any of the below things which help you establish a credit score.

In the UK, you can establish a credit score, usually after 36 months by:

Getting on the electoral roll

Opening a bank account

Getting a secured credit card

Getting a credit builder loan

How to get a mortgage with no credit

To get a mortgage with no credit will be very hard and you may very well need to get a bad credit mortgage but some of the below steps may make it easier.

Get a bad credit mortgage broker

Get a guarantor

Get a mortgage in principle

Ask for manual underwriting

Use a family deposit mortgage

Use a large mortgage deposit

Use a government scheme

Improve your credit score and history

Get a bad credit mortgage broker

Getting a bad credit mortgage broker is the first step to get a mortgage with no credit history. A bad credit mortgage broker will have the experience to pick out which mortgage lenders will be willing to lend to you, how to arrange your mortgage application and what supporting documents to submit to ensure you are viewed in the best light possible and guide you on how to improve your mortgage affordability.

If you have had things such as utility bills, phone contracts etc which you can present to the mortgage lender as proof of you being able to keep up with your monthly credit commitments then you may find that many mortgage lenders may be willing to lend to you.

Get a guarantor

A guarantor could help you improve your mortgage affordability greatly and could potentially help you get a mortgage with no credit history.

A guarantor will allow you to get a guarantor mortgage. These mortgages will require some collateral from the guarantor to secure 75% to 100% of the mortgage.

If you fail to keep up on your monthly mortgage repayments then the guarantor could lose their home through a home repossession.

Get a mortgage in principle

To get a mortgage with no credit you may want to first see if you can get a mortgage in principle. Using a bad credit mortgage broker to get a mortgage in principle from a suitable mortgage lender will give you an indication on whether you can get a mortgage with no credit or not.

You should be aware that a mortgage in principle does not include a through mortgage affordability check from the mortgage lender and hence you could still get a mortgage in principle and be declined a mortgage.

Ask for manual underwriting

If you have no credit then getting a mortgage will be difficult. One of the main ways you can improve your chances of getting a mortgage with no credit is by having manual underwriting rather than automatic underwriting by computers.

Most bad credit mortgage lenders will do manual underwriting but ensure you ask for it and ask your mortgage broker to request this (if they haven’t done so already).

Manual underwriting means a human rather than a computer will assess your mortgage application in much more detail. They will usually ask you follow-up questions and request further documents.

With manual underwriting you can really see the benefits of using a mortgage broker as they will usually have experience of what sort of documents you can submit to make your mortgage application look more appealing.

Use a family deposit mortgage

A family deposit mortgage is a mortgage where some of your family members put money away in a savings account for a fixed amount of time until you have made a certain amount of monthly mortgage repayments. At this point, your money is then released to you.

In some cases, your family member may even be paid interest on their savings.

A family deposit mortgage is a very good way to get a mortgage with no credit history.

Types of family deposit mortgages

There are several mortgage lenders offering a different variation of a family deposit mortgage, this includes:

the Barclays family springboard mortgage

the Lloyds lend a hand mortgage

the post office family link mortgage.

The family deposit mortgage by the Nationwide building society

The family mortgage from the family building society

A family deposit mortgage from the Loughborough building society

Each one of these mortgages works in its own unique way. We will briefly define how they work and what some of their benefits are.

The Barclays family springboard mortgage

The Barclays family springboard mortgage is a type of family deposit mortgage where your family members or friends put away 10% of the property price in a Barclays saving account over 3 years for a fixed interest rate. This means you will get a 90% loan to value mortgage.

You get a fixed rate on your mortgage for 3 years and after the 3 years, you move on to the mortgage lenders standard rate.

Your family member will get back their savings plus interest after 3 years if you have made all your mortgage repayments on time.

If you have not made all your mortgage repayments on time or defaulted on your mortgage then the home could be repossessed and your family members may have their funds held for much longer.

The Lloyds lend a hand mortgage

The Lloyds lend a hand mortgage is a type of family deposit mortgage which is similar to the barclays family springboard mortgage where a family member puts away 10% of the property price in a Lloyds saving account for 3 years at a fixed interest rate. This means you will get a 90% loan to value mortgage.

The Lloyds lend a hand mortgage will then allow you to get a fixed-rate mortgage fo the first 3 years after which you will move over to the mortgage lenders standard variable rate.

Your family member will then get their savings back after 3 years if you have made all your mortgage repayments on time.

If you have missed your mortgage repayments then the mortgage lender may hold your family members funds for much longer. This could also be the case if you have defaulted on your mortgage and the property has been repossessed.

The post office family link mortgage.

The post office family link mortgage is a type of family deposit mortgage where your family member uses 10% of a mortgage-free property to fund your mortgage deposit. You and the family member will be on the deed of your new mortgage and the mortgage lender will offer you a mortgage with a loan to value of 90% meaning you don’t need to pay any mortgage deposit towards this specific type of family deposit mortgage.

For the first 5 years of the mortgage, you will make two payments. One towards your family members 10% equity which is an interest-free advance to you. You make the second payment towards your 90% loan to value mortgage.

After the first 5 years, you will revert back to making one mortgage repayment towards your mortgage.

The family deposit mortgage by the Nationwide building society

The family deposit mortgage by the Nationwide building society is a type of family deposit mortgage where your family member needs to already have a mortgage with the Nationwide building society. Your family member can then borrow more to fund your mortgage deposit but you will then need to get a mortgage through the nationwide building society.

The family mortgage from the family building society

The family mortgage from the family building society is a type of family deposit mortgage where your family member can use the equity in their home or their savings as security for your mortgage so you can get access to mort affordable first-time buyer mortgage rates.

You will still need to put down a mortgage deposit of at least 5 % and your family members can provide security of up to 25%.

They can do this in one of three ways:

Use the equity tied up in their home with the Security Through Property option provided by the family building society

Deposit money in a savings account that earns interest with a Family Security Account

Deposit money in a Family Offset Account that doesn’t earn interest but reduces the cost for the borrower by reducing the mortgage on what interest is charged

A family deposit mortgage from the Loughborough building society

The family deposit mortgage from the Loughborough building society is a type of family deposit mortgage where equity in your family members property or their savings can be used as a security for your mortgage and in some cases both.

You may be able to assess up to 100% loan to value rates from the Loughborough building society family deposit mortgage.

Use a large mortgage deposit

A large mortgage deposit may help you get a mortgage with no credit. This is because a large mortgage deposit will reduce the mortgage lender loan to value and hence their risk.

If you have no credit you may not benefit from reduced mortgage rates even though you put down a large mortgage deposit.

One of the ways you can increase the mortgage deposit available to you is by using government schemes.

Use a government scheme

There are various government schemes which could help you get a mortgage with no credit but you should be aware that some of these government schemes stipulate that those buying should not have “bad credit”. Whilst that may not immediately apply to you as you have “no credit”, some entities may consider “no credit” as “bad credit”

Some of the government schemes you could use include:

  • Lifetime ISA– gives you a government bonus of £1,000 if you save the maximum £4,000 a year.
  • Help to buy ISA– gives a maximum bonus us £3,000 if you save the maximum allowed of £12,000. Before you get either you should consider which is better. Lifetime ISA vs Help to buy ISA.
  • Help to buy equity loan- gives you up to 40% as a 5-year interest-free equity loan. You begin to pay interest at 1.75 % after the fifth year and 1% plus RPI for every year thereafter.
  • Shared ownership– You can buy between 25% to 75% of the property initially with a shared ownership mortgage and then buy more using a staircasing mortgage.
  • Armed forces help to buy– similar to the help to buy equity loan but specific for the armed forces personnel giving them an increased chance of acceptance.
  • Rent to buy– This is the right to buy scheme on which this guide is currently discussing. A different marketing name is just used. Watch out for this when shopping to avoid missing out on eligible properties due to confusion.
  • Right to buy– allows you to buy your home at a discount price.
  • Preserved right to buy- same as above.
  • Right to acquire- same as above.

Depending on where you live, you may also be able to take advantage of home buying schemes provided by your local council. Example: In Norwich, the local councils provide the Norwich home options scheme.

Improve your credit score and history

The final thing you can do to help you get a mortgage with no credit is to look at various ways to improve your credit score and history.

When you first move to the UK, you will have no credit history.

You will need to wait 3 years for your data to show up but before then you can begin to do things which may reflect and help you build your credit history.

Tips to improve your credit score and history:

Get on the electoral roll

Get a secured credit card, a credit builder card, a credit builder loan  or a student credit card to show good credit repayment behaviour

Open a bank account to have a credit account noted on your credit file

In conclusion, getting a mortgage with no credit will be difficult but due to the new mortgage products being introduced, you may find it much easier

Use a mortgage calculator 

You can use our mortgage calculator to see what your monthly mortgage repayments could look like.

Tell us about you
 
Repayment type
First-time buyers are unlikely to be able to secure an interest only mortgage
Repayment
Interest-Only
 
Property value
£
 
Deposit amount
£
 
Mortage Term
Min 10
Max 40
 
years
 
Initial interest rate
Choose an example below, or enter a rate if you already know it
1.9%
2-years fixed
2.2%
3-years fixed
2.4%
5-years fixed
 
Enter a Different Rate
 
Calculate

 

Using a mortgage broker

You may want to consider using an independent mortgage broker to get a mortgage with no credit history.

Mortgage brokers are important as they can access mortgage products from across the whole of the market in some cases. This could be over 11,000 mortgage products. This may have some advantages than going directly to a mortgage lender.

A mortgage broker will look to understand your financial circumstances and then provide recommendations on which mortgage products may be suitable for you.

After giving you these mortgage recommendations, most mortgage brokers will seek your consent to apply for a mortgage in principle. 

This will allow you to shop for your home easier as more estate agents and sellers may take you seriously or it will give you confidence that your remortgage is indeed a possibility before you make a full mortgage application. 

Once you have found a home you want to buy or are satisfied with the mortgage offer for your remortgage then the mortgage broker will then look to get you a mortgage offer.

This will come with a key facts illustration document which details out the features of your mortgage including how much you will pay per month if there are any limits such as early repayment fees, or annual overpayment limits.

If you are happy with everything you can then go on to secure your mortgage with the help of a conveyancer. Your conveyancer will manage the legal searches on the property to ensure there aren’t any issues with it, they will oversee the sales agreement to ensure it is in your best interest, they will manage the transfer of mortgage funds, exchange contracts with the seller or their conveyancer and set a completion date with the seller or their conveyancer.

In this brief guide, we are going to discuss how to get a mortgage with no credit. If you have any questions or comments please let us know.

John Bate

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.