Bad Credit Mortgage Interest Rates

Understand what rates you might expect with bad credit and how a Mortgage Broker can help you

Do you have any adverse credit that you know of?

Home Bad Credit Mortgages Bad Credit Mortgage Interest Rates
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Nathan Porter

Reviewer: Nathan Porter

Independent Mortgage Advisor

Updated: March 15, 2024

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

March 15, 2024

Many people expect bad credit mortgages to come with excessively high interest rates.

While it’s true to say bad credit applicants don’t always have access to the best rates on the market, you may still have a wide range of lenders and rates open to you.

Bad Credit Interest Rates

Take a look at our rates table below to get an idea of the deals currently available for borrowers with poor credit.

Lender Product Details
Frosted Rates Image

Looking for more rates and deals?

We can match you with a mortgage broker who can provide you with up-to-date bespoke rates and deals from across the entire market.

Last updated December 2023

Please note that the above rates were accurate at the time of writing but are always subject to change. Speaking to a mortgage broker is the best way to find the most up-to-date deals.

What interest rate should you expect on a bad credit mortgage?

The exact rate you’ll qualify for will depend on the type of credit issues you’ve experienced. Each lender has its own criteria, and some are stricter than others.

On average, bad credit mortgage rates can be around 1-2% higher than they are for regular mortgages but can be higher or lower depending on your deposit amount and the circumstances surrounding your adverse credit.

Generally speaking, the rate you’ll end up with will be based on the following factors…

  • The age of the credit issues (the older, the better)
  • The reason it occurred (an unexpected life event is easier to excuse than general financial mismanagement)
  • The severity of the issue

As you might expect, the more serious, numerous, or recent your credit issues are, the fewer lenders you’ll have to choose from. As a result, you’ll find it harder to access the best rates and could end up paying more than an applicant with a perfect credit history.

There are also other reasons why you might not qualify for a mortgage with a specific lender, including your deposit size, your income, your employment status and income type, or your property type.

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How to get the best rate on a bad credit mortgage

There are several steps you can take to boost your chances of landing a better rate on an adverse credit mortgage. Step one is to make an enquiry with us so we can match you with a bad credit mortgage specialist.

The advisor we match you with will then guide you through the rest of the process, which entails:

  • Downloading and optimising your credit reports: This is particularly important if you have adverse credit as it can be the difference between mortgage approval and rejection, and boost your chances of securing a low rate.
  • Finding the best bad credit mortgage lenders: There are lenders who specialise in bad credit and offer exclusive deals for people who have it. The mortgage broker we match you with will have deep working relationships with these lenders.
  • Securing the lowest rate for you and helping you file your application: In other words, the right mortgage broker can help you save time, money and avoid missing out on the finance you need.

Other recommendations

If the typical bad credit mortgage rate still feels too high and you feel this is holding you back, here are several more strategies you can try:

1. Build up your deposit

You’ll find it much easier to get a mortgage with bad credit if you have a deposit of 30% or 40%. So, after you’ve met any existing debt repayment arrangements, focus on saving for your mortgage deposit.

Another way to increase your deposit size relative to the property value is to look at cheaper properties. A £30,000 deposit is only 10% if you’re buying a £300,000 property whereas it’s 15% if you’re buying a £200,000 property.

2. Get a guarantor

If you’re completely confident that any debt issues you’ve had are behind you, but your credit report doesn’t yet reflect that you could ask a friend or family member to help you get a guarantor mortgage. They will be responsible for making your mortgage repayments if you fail to, and their own home will be at risk.

3. Give it time

However serious your credit issues have been in the past if you commit to overcoming them and stay on track in the future, they will eventually become irrelevant to your application. The more months and years pass, the more lenders you’ll have access to.

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Other factors that determine your mortgage rate

Your credit history is one factor that could rule you out from the best mortgage rates.

However, your mortgage rate is also based on:

The Bank of England base rate

When interest rates increase, mortgage rates increase too. This could have more impact on applicants with bad credit than applicants with good credit. Your repayments on other debts can also increase with the Bank of England base rate, which might increase your debt-to-income ratio, and potentially rule you out of other mortgages.

The type of mortgage you get

Mortgages are available with fixed rates or variable rates. Variable rates typically start a little lower but come with the risk that they can increase in the future. Fixed rates start higher but remain the same for a certain period. You can choose a fixed rate for two, three, five, or more years, but longer periods typically come with slightly higher rates.

Your deposit size

Low-deposit mortgages are riskier for the lender than high-deposit mortgages, so they will typically offer lower rates for applicants with large deposits.

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What is the easiest type of mortgage to get if you have bad credit?

There isn’t really an ‘easier’ mortgage over any other.

The most popular would be a standard repayment mortgage – it’s the least complicated and also most widely available across the whole market.

So, in that respect, it could be seen as also being the easiest. But, regardless of that, there is still a process to follow when you have bad credit and if you stick to it, along with taking guidance from a broker, then no type of mortgage should feel out of reach.

This may include having to demonstrate a degree of patience until your credit record improves as rushing things could do more harm than good.

Find a bad credit mortgage broker

We work with numerous brokers who specialise in finding the best bad credit mortgage deals. They’ll be happy to help you find the best available packages and advise you on anything more you need to do before you apply.

If you’d like to be matched with the right broker for a free, no-obligation chat, just call us on 0808 189 2301 or enquire online.

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A CCJ is a moderately severe form of bad credit, so the rate you end up with will likely be higher than what you would qualify for if you have clean credit. This particular credit problem is, however, considered less severe than bankruptcy or repossession, so there could be options available.

Read our guide to getting a mortgage with a CCJ for more information.

Generally speaking, they will be higher than residential bad credit mortgages, usually by at least a full percentage point.

This means that bad credit mortgage rates in the buy-to-let market start at around 1-2% higher than the rates for standard buy-to-let mortgages, but could go higher or lower depending on the deposit and the specific type of bad credit in question.

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About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

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