If you have any existing debt, it could have an impact on your ability to get a mortgage and the amount you are able to borrow – no matter what your credit status is.

As part of the decision-making process, a lender will carry out an affordability assessment. If you are making regular payments to clear existing debt, then you have less money available to pay your mortgage. That can have a direct impact on how much you will be able to borrow.

In addition, some lenders see over indebtedness as an indication that you can’t manage your money. Add to that a history of bad credit, and your chances of being accepted start to drop.

Why do bad credit and outstanding debt make it harder for some people to get a mortgage?

Lenders conduct what is effectively a risk assessment when it comes to making a lending decision. They want to give themselves the best possible chance of having the money repaid. High-street lenders, in particular, are highly risk-averse. They have a tick-box approach to assessing borrowers and a rigid method for decision-making that tends not to look at each case on its individual merits.

As we mentioned above, if you have a monthly commitment paying off existing debt, that reduces the amount of money you have available to pay your mortgage. Also, in certain circumstances, it can suggest an inability to budget and manage your money.

Generally, if bad credit is an issue, the age of the adverse credit event is taken into account and it has less impact the longer ago it occurred. However, if there are any instances in the last six years (that’s how long information stays on your credit record) of payday loans, then that can be an added problem – even if you paid them off as agreed.

How can you manage your outstanding debt to increase your chances of getting a mortgage – even if you’ve got a bad credit rating?

It can be tough to get a bad credit mortgage with high levels of existing debt. In some instances, but not all, the best thing to do is to clear some or all of the debt. If you have saved up a good amount for a deposit and fees, investigate whether using some of it to clear your debt – then either saving up for a bit longer or putting down a smaller deposit – would help you to get a mortgage.

If you’re in this situation, the best thing you can do is to get some informed, impartial, expert advice.

We can help

Just Mortgage Brokers has a team of specialist bad credit mortgage brokers who are experienced in finding the best deals for people with debt and a history of poor credit. They’re unlimited, have access to the whole of the market, and can possibly tap into deals not available on the high street.

If you are looking for a bad credit mortgage with debt, get in touch. Initial help and advice is free, and it could make the difference between being accepted for a mortgage or not.