Does a criminal record affect a bank loan?

Last reviewed on 1st July 2022

Getting a mortgage with a criminal record is very much possible and shouldn’t cause you too many problems. That being said, getting the right advice before applying for a mortgage is crucial. Rushing into a mortgage with a conviction on your record can result in you being declined.

Whether your convictions are spent or unspent, lenders each have their own criteria. While some lenders will ask for details of any criminal convictions, other lenders won’t.

From a legal perspective, spent convictions don’t have to be disclosed under the Rehabilitation of Offenders Act 1974. Whether you disclose spent convictions or not, is entirely your choice.

If you have an unspent conviction, you’ll have to disclose this to mortgage advisors and lenders if you’re asked to do so. Getting a mortgage with a spent conviction is often easier but an unspent conviction shouldn’t stop you from trying to get a mortgage.

How to apply for a mortgage with a criminal record

Your method of applying for a mortgage will depend on whether your conviction is spent or unspent. For instance, if your conviction is spent, you legally don’t have to declare this, even if asked. This means that you’ll be assessed in the exact same way as an applicant that doesn’t have a criminal record. That is if you choose not to declare your spent convictions.

On the other hand, if your conviction is unspent, you will have to declare this if asked. It’s also worth noting that you should be honest with your advisor and declare your convictions at the earliest opportunity.

Mortgage advisors are on your side and will do their best to get you a mortgage. Declaring your criminal record allows mortgage advisors to then plan your application accordingly. Not doing so will leave advisors in the dark and unable to offer you the support needed.

Some lenders will ask you if you’ve previously been convicted, whereas other lenders won’t. This is why it’s crucial in informing your advisor beforehand, so they’re able to select lenders that aren’t concerned with past convictions. Doing so can open doors to the same mortgage deals that are available to applicants without criminal records.

Should you disclose an unspent conviction?

If you’re asked to disclose an unspent conviction during your mortgage application, then you definitely should. Not doing so will be taken seriously by lenders for failure to disclose information. This can impact your future chances of getting a mortgage so always be honest.

As discussed, telling your mortgage advisor is a must. If your advisor isn’t aware of your criminal record, they’ll struggle to find you a suitable lender. You should inform your advisor whether you’re asked or not.

If your advisor doesn’t ask you, it doesn’t mean to say your lender won’t. This can cause mortgages to fall through at the last minute, so always be upfront and honest at the earliest opportunity.

Even if you were approved a mortgage and a lender later found you lied, it can be enough to terminate your mortgage agreement. Furthermore, your lender may pursue you which could lead to another conviction.

Honesty is always the best policy. Even if your conviction is spent, it’s always best to be honest if you’re asked. There are many lenders that will accept you with a criminal record, even with an unspent conviction.

What will my lender ask about my criminal record?

Some lenders will ask you if you’ve ever had any criminal convictions or if there are any pending cases. Other lenders may also ask whether your family or cohabitants have a criminal record. More often than not, lenders ask these questions to build a profile of each applicant and not to catch someone out.

We’ve helped many clients to get a mortgage while having a criminal record and lenders will rarely decline you based on this. That being said, this is because the right lenders were approached from the start. Applying with an unsuitable lender can do quite the opposite and will often result in an application being declined.

As lenders will be building their profile on you, they’ll do assessments such as credit checks and affordability checks. Furthermore, this involves checking your address history.

Certain convictions can impact your credit score and if you’ve spent time in prison, you may have gaps in your address history. If you don’t disclose your convictions, explaining the gaps in your address history can become difficult.

Lenders will ask for proof of an address, which can include bank statements or utility bills. It’s important to have as much paperwork as possible to support your mortgage application.

Does the type of conviction affect my mortgage application?

If your lender asks you to disclose your convictions, they may delve further into your criminal record. For instance, if your convictions are related to fraud, money laundering or crimes related to finance, lenders will be very hesitant in approving a mortgage. In comparison, if your convictions are related to motoring offences, it’s unlikely to affect your mortgage in any major way.

If your conviction has affected your credit score, it can make getting a mortgage more difficult. That doesn’t mean to say you shouldn’t apply if you have bad credit. Many lenders consider applicants with poor credit. Furthermore, there are specialist lenders that focus solely on cases involving bad credit.

From a lender’s perspective, they want to be confident in your ability to repay your mortgage. If you get convicted again, then repaying your mortgage will likely become a problem, especially if you’re incarcerated. That’s why getting guidance from an advisor can be helpful, as we’ll explain everything you can do to help support your application.

How to prepare your application with a criminal record

If you have a criminal record, it’s best to consult an expert such as a mortgage advisor before applying for a mortgage.

Many applicants have applied and even got an agreement in principle before being declined later on in the application process. This can easily be avoided by carefully planning your application beforehand.

Each case is different as criminal records can vary quite considerably. As a result, the course of action to take in planning your application can also vary. That’s why it’s best to speak to an advisor that has experience with criminal records. An advisor can then assess your situation and guide you on how to best prepare your application, often preparing it for you.

Advisors also understand which lenders are more likely to approve mortgages with criminal records. Furthermore, we’re able to compare the best deals, saving you money in the process.

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Martin Alexander

Martin is a senior mortgage advisor and has held a CeMAP qualification for over 15 years while also completing an MBA in Global Banking & Finance.

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