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Mortgages for bad credit

Specialists for mortgages with arrears, defaults, CCJ's, Debt Management, IVAs, Bankruptcy and more!

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Darren was very thorough with his explanation on how everything works and his efforts to get finance was very prompt .


From our first phone call Lizzi was Professional and put me at ease straight away. Lizzi asked me about myself and reasons for remortgaging, I felt she listened well and this was evident as she asked appropriate questions and was clear in stating what i needed to do. Lizzi's communication was amazing, I never had to wait very long for her to answer my emails or calls, it was more my time constraints that held the process back. I was worried at first as I had found ZenFi online and was worried about being scammed but this has been a fantastic service and I will be recommending ZenFi to any of my close friends or family to use them. Thank You Lizzi, I have been waiting a long time to be able to go forward with my future plans for my family, you have definitely been the key pin in making this happen in such a seamless way.


Quick, professional & helpful

After being declined a mortgage elsewhere, I got in touch with Online Mortgage Advisor. Ben gave me a call back the same evening, found a lender willing to accept us by the next morning and had an Agreement in Principle later the same day. Ben was prompt, explained every stage and always called back when he said he would. Now fingers crossed for the full application...

Mortgages for bad credit

We receive more and more requests for information and advice on bad credit mortgages everyday, and it seems the demand for help is massive. There is a LOT of info online that is old and outdated, spam, and just plain wrong. As such, I have decided to compile all the most important information in one place, so anyone that wants a mortgage with bad credit in the UK will have a good idea about what is possible for them. We also offer a platform for visitors to enquire with the specialists and find out if they are eligible. Working with Online Mortgage Advisor we arrange adverse credit mortgages everyday, and have loads of happy customers. This info is relevant and because lenders change their criteria regularly, it is frequently updated. To find out what you’re eligible for and which mortgages are best for you please make an application, use the live chat or give us a call on 0800 304 7880.

Mortgages for customers with bad credit have seen radical change over the last 4 years, and continue to be in a state of flux post credit crunch as the lenders begin to find their feet. Bad credit mortgage loans are not as freely available as they were, but things have started to improve, especially over the last 6 months where several new lenders have returned to the market. The thing to remember is that each lender is different and just because you may have been declined by one, doesn’t mean you won’t be accepted by another. The specialist advisors working with us have arranged mortgages for people with poor credit in the following circumstances:

  • No credit history
  • Low credit score
  • Late payments
  • Missed mortgage payments
  • Defaults
  • CCJ’s
  • IVA’s
  • Debt management Schemes
  • Repossessions
  • Bankruptcy
  • Payday Loans
  • and customers with multiple credit problems

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Important: Bad credit history mortgages usually (with the exception to bankruptcy as you may also appear on the Hunter Register) relate directly to what is showing on your credit file. It may shock you to hear, but different lenders use different credit reference agencies. They may share their records to make sure their information is accurate, but often this doesn’t happen. This can leave an interesting void, where one lender using Experian may decline you for a default that another lender using Equifax or Call Credit might not see.


Which credit issues will mortgage lenders accept?

These tables are based on experience and expert opinion regarding what’s possible in the current market. Whether you are actually eligible for a mortgage depends on your personal circumstances. ‘Yes’ or ’maybe’ = it is possible, it DOES NOT say that if you have any of these issues you are in any way guaranteed a mortgage, as applications are based on a number of factors and interpretations by lenders. Please only use this for reference – if you want to know what mortgage you are eligible for specifically, then please fill out an enquiry form and an adviser will be in touch.

Un-secured (finance not secured against a property i.e. mobiles, credit cards, personal loans etc).

  0-12 months 1-2 years 2-3 years 3-4 years 4+ years
Late payments Yes (any number) Yes (any number) Yes (Any number) Yes (Any number) Yes (Any number)
CCJ’s Yes (Any value) Yes (Any value) Yes (Any value) Yes (Any value) Yes (Any value)
Defaults Yes (Any value) Yes (Any value) Yes (Any value) Yes (Any value) Yes (Any value)
Debt MGMT Yes (see note*) Yes (see note*) Yes (see note*) Yes (see note*) Yes (see note*)
IVA Possible with 25% deposit Possible with 25% deposit Possible with 20% deposit Possible with 20% deposit Possible with 10% deposit
Bankruptcy Possible with 25% deposit Possible with 25% deposit Possible with 15% deposit Yes with 5% deposit Yes with 5% deposit

*For debt MGMT: Debt management plans sometimes don’t effect your credit file, in these instances some lenders are happy to consider an application. Often though, the establishments you owe money to will slap a default on your file the month after the agreement has been reached – something debt scheme companies don’t always share with you! So, if you are in debt management plan and looking for a mortgage, get a free trial of your Experian credit report here and send it over to us, a good broker can let you know, based on this, the likelihood of you obtaining finance. Note: The information in this table is accurate as of Q4 2017.

Secured (finance secured on a property such as a mortgage or secured loan).

  0-12 months 1-2 years 2-3 years 3-4 years 4+ years
Mortgage arrears Yes (usually max 3 late) Yes (Any number) Yes (Any number) Yes (Any number) Yes (Any number)
CCJ’s Unlikely Maybe (If good LTV) Yes (Any value) Yes (Any value) Yes (Any value)
Defaults Unlikely Maybe (If good LTV) Maybe (If good LTV) Yes (Any value) Yes (Any value)
Repossessions Unlikely Yes (with 25% deposit) Yes (with 25% deposit) Yes Yes


The impact of payday loans on your mortgage application

Payday lending has received a lot of press recently and the market has simmered down somewhat since the review and subsequent measures placed on lenders. There has been little coverage other than here on OMA, to indicate the ongoing impact payday loans can have on mortgage applications, with many wrongly suggesting that such borrowing improves your chances of approval. It doesn’t and in fact, recent payday loan use is one of the single biggest blockers to approval across the board. Find out more about how payday loans cause mortgage declines and what to do about it.


Other options for your home loan

Sometimes there just isn’t a mortgage lender who can do what you need. When you are looking to raise further finance, perhaps to consolidate debts or for home improvements, don’t give up hope. Second charge loans, also known as secured loans, may offer the solution you need. For those with restricted credit due to a chequered credit history, it may be possible and more appropriate than a 1st charge mortgage designed for borrowers with adverse credit, to look at the option of a second charge loan. These loans can be more flexible in certain situations, therefore there are some lenders who may be willing to lend on a second charge basis when a first charge mortgage is not possible. Find out more about when a second charge loan may be more appropriate than a remortgage.


Best bad credit rating mortgages:

To get the best rate you need to find all the lenders most likely to approve your circumstances. To do this, you need to know what you’re doing, and for the most part, be able to navigate a landscape that sadly most brokers don’t understand how to handle. Either read our article for the best adverse credit mortgage rates, or simply make an enquiry and one of the specialists will be in touch to match you with the best deal possible.


How to improve your credit for a mortgage

1) Check your credit reports – all of them. In order to establish if a lender would consider your application, you’ll need to know what they are looking at. Every lender is different in who they use to reference an application – some use Call credit, some Experian, some Equifax. As the agencies don’t always share their info they are often different, and it can be that you are declined because of something on a report you don’t know about. Sign up for your free trials here…

Get your credit rating

2) Be an active borrower If you don’t have a credit card, get one and spend then clear your balance every month. You should avoid paying any interest doing so within the 30 days period, and  it really helps prove you can borrow and repay. If you have struggled to obtain a credit card, try the Luma card by Capital One here… Top Tip: One of the things you can do to increase your credit score is to obtain an adverse specific credit card, and spend and repay in full on a monthly basis – this helps to prove you can borrow and live within your means at the same time, and you’ll notice your score improve over the coming weeks and months. There are 2 options here, the first is a standard credit card specifically for those with bad credit, the second is for those who are declined for standard cards and need a guaranteed-acceptance card (usually used by those who have had more severe and more recent adverse credit). Apply for the Card by Aqua here. Apply for the Mastercard Cashplus gold here.


Bad credit mortgage lenders

There’s currently various mortgage lenders for applicants with bad credit history, and as the industry evolves and wider economy develops, the number of poor credit mortgage lenders continues to increase. One of the main issues with the industry is that there’s hundreds of thousands of potential borrowers who ARE creditworthy, but don’t know they are. They either sit on a high mortgage rate thinking they are unable to refinance due to their adverse credit, or they have deposit to buy but have been told they aren’t eligible. It is our mission as a business to spread the word – there’s plenty of mortgage lenders for bad credit borrowers out there, you just have to look in the right place (here, naturally!).

How mortgage lenders for bad credit borrowers have improved over time

Back in 2009 the credit crisis wiped out almost every one of the bad credit lenders in the market, and only those with squeaky clean history could find a mortgage. Since then, the market has made an overwhelming recovery, and with interest rates so low at the moment, rates of borrowing have never been better.

This causes a problem with lenders however, who have been involved in a race to the bottom to compete for market share, slashing rates to increase lending volumes. The other way to increase lending is to open criteria up to borrowers that may be considered riskier business, which of course includes those who have missed payments, defaults and CCJs, right up to IVAs and bankruptcies. The attractiveness of specialist lending continues to gain momentum, with more and more bad credit mortgage lenders coming to the market in 2016 and 2017, with more applying for permissions and set to join in 2018.

How do poor credit lenders determine eligibility?

There are two main things involved in lender assessments:

  1. The type / severity of the issue
  2. The date it was registered

The type of the credit issue

As you would expect, most lenders will take the severity of a credit issue into account when determining eligibility for a mortgage loan, meaning that missed payments on bills or loans are invariably dealt with a higher degree of leniency than more serious examples (such as a recent bankruptcy for example).

The date of the issue

Furthermore, many mortgage lenders for bad credit history tend to favour applications made by individuals with historically older examples of adverse credit issues (as opposed to more recent misdemeanours), while some will ask clients to reapply for a loan once a certain passage of time has elapsed.

For example, anyone who have experienced bankruptcy are unable to apply for a mortgage until they have been discharged (which usually takes around twelve months), although most lenders will insist on a three or four year period as well as a good credit history in that time before they will consider a loan.

Similarly, mortgage rates for customers who have had a property repossessed within the last three years tend to be sky high, but steadily decrease with every passing year. The thinking here, of course, is that the longer the customer has managed to maintain financial activity without incident, the lower the risk of lending.

Bad credit remortgage lenders

Remortgaging with adverse credit can be far simpler than for a purchase, namely because you have 2 options: either a full remortgage of your debt, or taking a secured loan/second charge mortgage, which can be even more flexible in terms of criteria. Often if you are declined for a main mortgage but need to raise capital for consolidating debt, home improvements, or any other legal purpose, there may well be a second charge mortgage lender offering a secured bad credit loan who’ll accept you. They tend to have a higher tolerance for adverse credit issues, and most notably, affordability. It’s not unheard of for a borrower to obtain a loan up to 10x annual income, whereas main first charge bad credit mortgages are usually capped at 4x or 5x income.

Bad credit mortgage lenders (UK)

Most mortgage companies for bad credit applicants will only secure finance against properties in the UK, for borrowers domiciled in the UK. If you are living abroad for more than 3-6 months a year, then it’s likely you’ll be considered an expat, and therefore only eligible with expat lenders. If your property is abroad and you are in the UK, then you’ll only be eligible with overseas/international lenders, and the info in this article is more than likely not applicable. We do have specialists who work with overseas mortgage companies for applicants with bad credit, so make an enquiry and we can refer you across to get you the most relevant information.

Are there adverse credit mortgage lenders in the UK for second homes?

Yes, although obviously a history of bad credit in this instance could prove to be extremely restrictive, which is why getting advice from across the whole of the market to achieve the best deals is so important. Either way, deposits and income requirements are likely to be higher than for first charge residential mortgages with many lenders.

Are there low credit mortgage lenders for secured loans?

Yes, there are. Moreover, because these types of product require the borrower to pledge some form of asset (usually a property) as collateral against the loan, credit issues are less of a problem here, as some secured loan lenders are more flexible than first charge lenders and can accept more severe and recent issues.

However, some lenders may impose minimum income requirements on borrowers, while fees and rates can be higher than first charge mortgages in some cases. Loan to values can vary according to the amount borrowed.

Loan to value is how much a lender is prepared to offer in relation to the value of the property. Typically Loan to value (or LTV) range from 50% up to 95% – for instance, a borrower taking out a £95,000 mortgage on a property valued at £100,000 would have a LTV ratio of 95%.

Are there bad credit score mortgage lenders for large loans?

Yes, although specialist advice will undoubtedly be needed in these cases as adverse credit ratings or issues can affect the amounts which lenders will be prepared to offer. As a result, meanwhile, LTVs, income requirements and overall fees and costs seem to be offered on a ‘case-by-case’ basis.

Who are the best mortgage lenders for bad credit customers?

Who we’d deem are the best lenders for bad credit mortgages entirely depends on your situation. Each lender specialises in different issues, so a customer with defaults would be best placed with a completely different range of lenders to a borrower in a debt management plan or with a bankruptcy, for example.
The best bad credit mortgage lender also varies for different income types, and loan to values. If pressed, who we’d consider to be in the top 10 bad credit mortgage lenders would be those that offer the best rates, at the highest loan to values, to borrowers with the most adverse of credit files – the thing is, this changes every day! Lenders are constantly changing their policy and procedures, and when one day they may decline a certain group of customers, the next they accept them. Therefore, it’s so important to use a broker working in the market every day, who has their finger on the pulse!

Are there any bad credit mortgages with guaranteed approval?

As with anything in the mortgage world, sadly nothing lenders claim to offer is guaranteed. There are however, lenders who accept a huge and severe range of credit issues that often stems far past what most borrowers believe to be possible. This includes defaults and arrears as recent as last month borrowing up to high loan to values, right through to previous repossessions or bankruptcies a year ago, with discharge of 3 years previous being able to borrow up to high loan to values. Bear in mind that mortgage approval comes in 2 stages: an initial agreement in principle (AIP) and a full application approval. Once the initial application is submitted, the underwriter will still need to sign off your application with a full assessment of your documentation and reasons for the credit issues, to establish if you’re likely to be at risk of defaulting in future. For this reason, it’s important to not view an AIP as a guarantee, and to wait until the mortgage has been underwritten and signed off in full before packing your things into boxes! Inexperienced brokers who approach lenders without reviewing a credit file, and without discussing the case with an underwriter are at serious risk of getting declined, or worse, obtaining a false accept in the AIP – this can lead to being declined at full application, often after valuations have been carried out, which can result in wasted money and time spent chasing an approval that was never going to come. The absolute best way to get guaranteed approval with a bad credit mortgage lender is to have a specialist review your credit files (all of them) and match you with the best lender who’ll accept the issues on record. Before even approaching the lender formally, the specialist can establish your exact situation, and then discuss the case with the lender directly to get a verbal acceptance before proceeding. This way, when the case passes the AIP stage you can be far more confident in the decision, as the likelihood of it going through at full application stage is much higher.


High street lenders bad credit customers

Contrary to popular belief, it is sometimes possible for high street mortgage lenders to accept bad credit applications, but only in the right circumstances when applied for in the right way. Many high-street lenders will never accept your application if issues are severe enough (such as bankruptcy / repossession), however if such issues are historical enough some can be more flexible.

Typically, any issues will need to have fallen off your credit file to fit with these lenders, but it is sometimes possible for a specialist to present the back-story and justification of issues to a lender in the right way, so if they have an appetite to lend they may consider going outside their usual policy by exception. This is far more likely if your case is strong in all other areas, for example you aren’t borrowing a large amount compared to your income, and you have a large deposit (65% loan to value or less is often the tipping point).


Specialist bad credit mortgage lenders

“Specialist” is the more acceptable (and probably more P.C.) way of saying “sub-prime” which is the old word for a borrower who doesn’t fit mainstream criteria. Historically this means those with severe adverse credit and/or those wanting to self-certify their income. If you are looking to find subprime mortgage lenders for bad credit borrowers, then these are the same as specialist adverse credit mortgage lenders. As lending in the high-street continues to move toward the more mainstream “vanilla” borrower (someone with no history of credit issues and very straightforward and stable income, with large deposit), more and more customers fall outside this remit and are considered “niche” or “specialist”. This has seen increased demand for specialist advice, and increased competition by lenders in these markets, hence the fantastic rates now available. For an up to date review of how you can get approval with one of the mortgage lenders with bad credit, use our menu to visit one of the niche-specific pages related to each issue individually. Here you will find all the info you need to establish if it’s worth making an application.

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

Our mortgage jargon buster

Having no equity is an issue for lenders because if you don’t repay the mortgage, they have to try and sell the property to get their money back, and if your loan was 100k and the house 100k (100% LTV) the chances of them getting full price and then covering their costs are nil. In fact, at 90k (90% LTV), the chances of covering all costs are slim.

When you are getting a mortgage with bad credit, income rules are the same on normal applications, and it needs to be adequate to show you can easily afford the mortgage now, and into the future. It’s not always based on the monthly payments, which is at times frustrating especially for those consolidating debts from £2000pm to £1200pm for example, where the £1200 is deemed affordable even though the borrower was keeping on top of the £2000! Usually, a borrowing limit of 4x salary is a common figure, so if you earn £20k, you could borrow £80k, although some lenders go to 5x, and at times more for higher earners.

Personal factors effecting mortgages for poor credit criteria include: age, number of applicants, application type (right to buy/ family purchase etc) and more.

To get mortgages with bad credit, if you have other assets, such as equity in other properties, businesses, investments, savings, then these can show a lender you have other means to support yourself and their loan, should you fall into trouble.

Some lenders have different takes on non-standard property, so if you’re buying or remortgaging a thatched cottage, concrete property, or maybe a property with an annexe, it can effect a lending decision.

For mortgages with a bad credit score, it’s important to remember that although most lenders will give you a score, some don’t. The ones that do will limit your borrowing, your LTV or decline you if you’d don’t have a high enough score. But the specialist bad credit mortgage lenders that don’t score will assess your credit file understanding that at certain times in life, things happen, and if they aren’t too severe or there is a good explanation, they may well approve your loan. Note: Mortgages with bad ‘credit rating’ relate to the same thing as ‘credit score’.

Mortgages for people with bad credit history are most impacted by the type, amount and date of the credit issues. The more recent the issue, the worse it looks, and the more serious the issue (in terms of £ and the type of credit the issue was with) the worse it looks. So, a mobile phone default of £100 is better than a secured loan default of £100. A CCJ for £5,000 is far worse than a CCJ for £50.

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