Looking for a Bad Credit Mortgage?
Looking for a bad credit mortgage? See how experts can secure your mortgage approval even with bad credit
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Author: Pete Mugleston - Mortgage Advisor, MD
Reviewed By: Nathan Porter - Independent Mortgage Advisor
You can get approved for a mortgage with bad credit, we explain how that is possible, what criteria you will need to meet, and how the right mortgage broker can help you do it right.
What is a bad credit mortgage?
This is a type of mortgage for borrowers with adverse credit, a poor credit score or a low credit rating. These deals are often arranged through specialist mortgage lenders who are better equipped to cater for the needs of borrowers who fall into this category and are worried they won’t be able to buy a house as a result.
How do they work?
Bad credit mortgages are no different to regular mortgages, but the way they are assessed is often different. Rather than simply reject an application because adverse credit is present, the lender will review the age, severity and reason for the credit problems and base their lending decision on these factors.
These mortgages are usually offered with a higher interest rate to offset the risk posed by the bad credit, have higher deposit requirements and are often arranged through specialist mortgage brokers.
Did you know… You could access 30% more of the mortgage market with a specialist Bad-Credit mortgage broker on your side.
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How to get a mortgage with bad credit
Using our unique, free broker-matching service, we can help you find a mortgage broker who specialises in bad credit. This will boost your chances of approval and securing a favourable interest rate for your mortgage.
Make an enquiry with us and you’ll be paired with a specialist advisor. They will then guide you through the following steps to full application:
- Downloading your credit reports: You can do this yourself by signing up for a free credit report trial. Whilst your broker won’t be able to carry out a credit check for you, they will be able to help identify what the credit issue is and advise you on the best course of action from this point. They’ll also help remove any inaccurate or outdated information that could otherwise hinder your chances of getting a mortgage.
- Building up and optimising your credit files: Your advisor will suggest ways to build up credit quickly to improve your prospects ahead of your application.
- Preparing the necessary documents and paperwork: You will need documents including proof of address, ID and three months’ bank statements. Head to our mortgage applications page if you need a full list of the documents required.
- Finding the mortgage deal for your circumstances: The right mortgage broker can help you secure the best rate and deal thanks to their knowledge, experience and deep working relationships with lenders in this corner of the market.
What fees will a bad credit mortgage broker charge?
Typically, a broker will charge either a flat fee or a percentage of the mortgage amount, which is payable once the mortgage has been completed. For straightforward cases, this could start anywhere from between £300 – £500 as a flat fee or up to 1% of the mortgage loan.
Some brokers won’t charge any fee to a customer at all and will simply take a procuration fee (usually up to 0.5%) from the lender.
The amount a broker charges depends on the complexity and work involved with the specific mortgage application. For more complicated cases – where severe bad credit is involved – a broker will likely charge higher fees and could also ask for payment to be made in stages during the process.
For example, if a mortgage broker sets a fee of, say, £900 for a complex application they could ask for that payment to be made as follows:
- £300 once the agreement in principle has been received
- £300 when the mortgage offer is in place
- £300 upon full completion
What credit issues will mortgage lenders accept?
Under the right circumstances, it is still possible to get approved for a mortgage with the following credit issues below, which have been grouped together based on their severity.
Not severe
- No credit history
- Low credit score
- Late payments
Severe
- Missed mortgage payments
- Defaults
- CCJs
- IVAs
- Debt management plans
- Payday Loan usage
Very severe
- Repossessions
- Bankruptcy
- Multiple credit problems
How to improve your chances of approval
You can boost your chances of qualifying for a bad credit mortgage by doing the following:
- Make sure your credit reports are up to date: Check your credit reports for any outdated information. If anything is inaccurate you can request to have the information removed, and this can strengthen your chances of mortgage approval.
- Save up as much deposit as possible: Most mortgage lenders will ask you for 5-10% deposit, but if you have poor credit, the minimum requirement can be higher than this. Any extra you put down can increase your chances of landing a low interest rate.
- Consider family support options: If you have family who are willing and able to support you, there are options including guarantor mortgages and family springboard mortgages that could be worth exploring.
- Explore government schemes: You may find it easier to qualify for a bad credit mortgage if you qualify for a government scheme such as Shared Ownership, Right to Buy or the First Home scheme.
- Apply through a specialist mortgage broker: There are mortgage brokers who specialise in bad credit, and their knowledge, experience and lender contacts can significantly improve your chances of mortgage approval and landing a low rate.
Watch our video for a quick insight into how bad credit mortgages work, or read our guide below for in-depth information about this topic.
Eligibility Criteria
There are three main things involved in mortgage eligibility assessments when bad credit is a factor:`
- The type and severity of the issue – missed payments on bills or loans are given more leniency than more serious problems such as recent bankruptcy, for example
- The date it was registered – the older your adverse credit history, the better. After six years, even the most severe credit issues will have disappeared from your credit reports, but deposit requirements can also be higher while they are present.
- The reason for your bad credit – An unexpected life event is easier for a mortgage lender to overlook than general financial mismanagement. If you can provide a satisfactory explanation for your adverse, your chances of approval may increase.
Deposit requirements
The minimum deposit requirement for a residential property in the UK is 5% or 15% for a buy-to-let, but if you have adverse credit, some providers will only offer you a mortgage loan if you put down more deposit, depending on the age and severity of the issue.
If sufficient time has passed and the specific credit issue you’ve had is no longer recorded on your credit report, it is possible to get a mortgage with a low deposit – even the most severe cases.
For example, a repossession remains on your credit record for seven years. Once this time has passed – and as long as your credit history has been clear since – there’s no reason why a lender would not consider you for a mortgage with only a minimum deposit of between 5%-10%.
The table below will give you an idea of the amount of deposit you will typically need based on the type of adverse credit you have:
| Bad Credit Factor | Severity | Typical Deposit Required |
|---|---|---|
| No credit history | Not severe | 5% - 10% |
| Low credit ratings | Not severe | 5% - 10% |
| Late Payments | Not severe | 5% - 10% |
| Unauthorised overdraft charges | Not severe | 5% - 10% |
| Mortgage arrears | Severe | 5% - 15% |
| Defaults | Severe | 5% - 15% |
| County Court Judgement (CCJ) | Severe | 5% - 15% |
| Debt Management Plan (DMP) | Severe | 5% - 30% |
| Individual Voluntary Arrangement (IVA) | Severe | 5% - 30% |
| Bankruptcy | Very severe | 5% - 40% |
| Multiple credit issues | Very severe | 5% - 40% |
| Repossession | Very severe | 5% - 40% |
Are you guaranteed approval with 50% deposit or more?
Nothing is guaranteed as your credit profile is just one variable the mortgage lender will review. However, you will stand a good chance of finding a provider willing to offer you a 50% loan-to-value with bad credit, as a deposit this substantial will offset the risk involved in the deal – provided other aspects of your application are strong.
You will still need to pass all of the standard eligibility and affordability checks, but a deposit of this size will certainly help your cause.
Can you get a 100% mortgage with adverse credit?
This will prove very difficult – if not impossible – as 100% mortgages are not typically offered to customers with bad credit, or anyone else, for that matter. One of the only ways to get a residential loan with no deposit whatsoever is by having a family member or close friend act as a guarantor.
With a bad credit guarantor mortgage (also known as bad credit family springboard products), the lender will secure the loan against a property your guarantor owns or against their savings, as this security can serve as an alternative to a deposit.
Other factors
Although a provider will look at your credit history when assessing your application, they might also base their lending decision on the following variables…
Income & Employment
The more you earn, the more you could borrow, but how you earn your income will also be of interest to the mortgage lender when they’re calculating the size of your mortgage.
A specialist mortgage lender might be needed if you’re self-employed or are hoping to get a mortgage based on bonuses, overtime or commission. Furthermore, there are specialist lenders for customers who are looking for a mortgage on low income.
The good news is that having bad credit will not directly impact the amount you can borrow, as this is largely based on your income and outgoings. Most mortgage lenders will cap your maximum borrowing at 4.5 times your annual salary, though others might go higher.
Age
Some providers won’t cater for borrowers over 75, others 85 and a minority will lend with no upper age limit, as long as they’re confident the borrower will be capable of repaying their loan debt in retirement.
Outgoings
Any debt repayments you’re making could impact the size of the mortgage you are offered. Other significant outgoings (such as outstanding loans or dependent children) may affect the amount you’re able to borrow. You can read more about debt-to-income ratios and how they are calculated..
Property Type
Properties with non-standard construction (i.e. thatched roof, timber frame, etc) might require a specialist.
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Which mortgage lenders offer bad credit mortgages?
A wide range of lenders will consider applications of this type, from high street banks to specialist mortgage providers, and some of them will even consider high-risk customers with very poor credit.
To give you a snapshot of how different lenders assess each type of credit issue, we’ve put together the criteria tables below…
Not Severe
| Provider | Accepts people with no credit history? | Accepts people with low credit scores? | Accepts people with a history of late payments? |
|---|---|---|---|
| Accord Mortgages | Case-by-case basis. May be considered depending on credit score and deposit amount | Potentially / Maximum one missed payment in last 24 months | Yes |
| Barclays | Case-by-case basis. May be considered depending on credit score and deposit amount | Potentially / case-by-case basis | Yes |
| Bluestone | Yes | Potentially / no arrears in last 12 months | Yes |
| Halifax | Case-by-case basis. May be considered depending on credit score and deposit amount | Potentially / case-by-case basis | Yes |
| HSBC | No | No | Yes |
| Natwest | Case-by-case basis | Potentially / no arrears in last 12 months | Yes |
| Santander | Case-by-case basis | Potentially / no arrears in last 12 months | No |
| Virgin Money | No | Potentially / no arrears in last 6 months | Yes |
Severe
| Provider | Missed mortgage payments? | Default payments? | CCJs? | Debt Mgt Schemes? | IVAs? |
|---|---|---|---|---|---|
| Accord Mortgages | Maximum one in last 24 months | Up to max. £500 | If satisfied after 36 months. No max. value or number | Satisfied – yes | Satisfied, after six years – yes |
| Barclays | Maximum three in last 24 months | Up to max. £200 and satisfied | Ignored after 36 months. Up to max. £200 | Satisfied – yes | Satisfied, after six years – yes |
| Bluestone | Maximum four in last 24 months | Up to four registered in last 36 months. No max. value | Up to three registered in last 36 months. No max. value | Yes | Satisfied after three years – yes |
| Halifax | Yes | Yes | Yes | If satisfied | Satisfied, after six years – yes |
| HSBC | No | Ignored after 36 months. No max. value or number (satisfied) | Ignored after 36 months. No max. value or number (satisfied) | Satisfied – Yes | Satisfied after three years – yes |
| Natwest | Yes – unless occurred in last 12 months | Yes – only if satisfied | Yes – only if satisfied | Yes – only if satisfied | Registered longer than six years – yes |
| Santander | No | Yes – after 12 months. No max. value | Yes – if satisfied and not within last 3 months | Yes | No |
| Virgin Money | Max. Two ignored afer 6 months. | Yes. Max value £2000 (if satisfied) | Yes – Max value £500 | Yes – If satisfied | No |
Very Severe
| Provider | Bankruptcy? | Repossession? | Multiple credit problems? |
|---|---|---|---|
| Accord Mortgages | Discharged after 6 years – yes | After 6 years – yes | Yes |
| Barclays | Discharged after 6 years – yes | No | Yes |
| Bluestone | Discharged after 3 years – yes | After 2 years – yes | Yes |
| Halifax | Discharged after 5 years – yes | After 6 years | Yes |
| HSBC | No | No | No |
| Natwest | Discharged after 6 years – yes | After 6 years – yes | May be considered depending on the severity of the issues and when they were registered |
| Santander | No | No | Yes |
| Virgin Money | No | No | Yes |
Mortgage lenders eligibility criteria can change at any time, so this information should only be used for example purposes.
For up-to-date figures and bespoke advice about which lenders you should consider, make an enquiry and we’ll introduce you to a mortgage broker with experience in this area for free.
High street lenders
High street lenders don’t always offer mortgages to people who have a bad credit record, and the ones which do might offer you unfavourable rates.
The tables below will give you an idea of how likely you are to get home financing based on the type of credit issues you have and how long you might have to wait before pressing ahead.
| 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) |
| Mortgage Arrears | Yes (Usually max 3 late) | Yes (Any number) | Yes (Any number) | Yes (Any number) | Yes (Any number) |
| CCJs | Yes (if good LTV) | Maybe (If good LTV) | Yes (Any value) | Yes (Any value) | Yes (Any value) |
| Defaults | Yes (if good LTV) | Maybe (If good LTV) | Maybe (If good LTV) | Yes (Any value) | Yes (Any value) |
| Debt MGBT | Unlikely | Yes (If credit report is unaffected) | Yes (If credit report is unaffected) | Yes (If credit report is unaffected) | Yes (If credit report is unaffected) |
| IVA | Unlikely | Possible with a 25% deposit | Possible with a 20% deposit | Possible with a 20% deposit | Possible with a 10% deposit |
| Bankruptcy | Unlikely | Possible with 25% deposit | Possible with 15% deposit | Possible with 5% deposit | Possible with 5% deposit |
| Repossessions | Unlikely | Yes (with 25% deposit) | Yes (with 25% deposit) | Yes | Yes |
Please note that these tables are for example purposes only and should be used purely as a general guide. To get up-to-date information it’s best to speak with a mortgage broker.
If you have any type of bad credit, the independent brokers we work with will search the entire market for the best deal based on your needs and circumstances.
What interest rate to expect
Typically, if there is a history of bad credit, interest rates are likely to be 1-2% higher than a regular mortgage.
The table below shows some examples of interest rates:
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 September 2023
Please note that the above rates are always subject to change at the lender’s discretion. Speaking to a mortgage broker is the best way to find the most up-to-date deals.
Get matched with a bad credit mortgage broker today
If you have bad credit of any kind, getting a mortgage can be more difficult and the consequences of approaching the wrong lender or being declined can be more severe. But the good news is that bad credit doesn’t mean you can’t get a good deal, and help is out there.
The right mortgage broker could help you get onto the property ladder despite your credit issues, and the rates they help you secure might even surprise you. We offer a free broker-matching service that can find the right broker for you by assessing your needs and circumstances and pairing them with an advisor who has the expertise you need.
Call 0808 189 2301 or make an enquiry online and we’ll set up a free, no-obligation chat.
FAQs
Yes, potentially. It really depends on the age, severity and reason for your credit issues, along with the overall strength of your application.
This is by no means guaranteed mortgage approval as your lender and their underwriting team will still need to carry out further checks before they will progress to full application.
Your chances of securing mortgage pre-approval and successfully progressing from there will improve if you have a bad credit broker on your side.
As long as you can pass the affordability checks, your application for a second loan is likely to be approved, even if you have poor credit. The application process will typically be similar to your first, though if you’re still paying off your first one, the main concern will be whether you can afford to meet both monthly payments at the same time.
Whether you qualify for one will depend on the severity of your credit problems, how long they’ve been on your file and how closely you meet the criteria. You’ll also need to meet the deposit requirements, and if you have poor credit, you may need to put down a larger deposit.
Yes, though seeking specialist advice is highly advisable because first-time buyers could be considered a higher risk to some providers, and your adverse won’t help with that.
Not all providers will allow you to use one of the government’s first-time buyer initiatives. However, a more flexible lender might permit it, as long as you meet their other requirements.
Another thing to consider is that they tend to come with larger deposit requirements, which some first-time buyers might struggle to meet. The advisors we work with will help you find the best deals for a first-time buyer with your needs, circumstances and credit history.
Many will typically look at the last six years, as this is the maximum amount of time most credit issues can remain on your file.
Even if you have active adverse within this time frame, it may still be possible to get a loan, depending on the severity of the issue and when it was registered.
Yes, it’s possible if your partner has good credit as there are lenders who specialise in these types of joint applications. In this scenario, your bad credit will still be factored in when the overall strength of the application is being assessed, and it might mean the deals you qualify for are fewer.
That said, mortgage approval and favourable rates could still be possible if you apply through a specialist broker who knows exactly which lenders to approach.
Technically, yes, but bear in mind that your income and creditworthiness are assessed separately.
The amount of income you have determines the size of the mortgage you will qualify for, but your eligibility for that mortgage will be looked at separately and the lender will scrutinise your credit files as part of this assessment.
That said, there is some crossover here, as having a stable, long-term income will present you as a safe bet to potential mortgage lenders and can increase the number of deals that you qualify for.
Qualifying for a mortgage can be more difficult if you have bad credit as there is more risk to the lender. To offset this risk, many lenders raise their rates and deposit requirements, while some won’t lend at all under these circumstances.
There are, however, specialist bad credit mortgage brokers who can make it easier to get approved. Their knowledge, experience and lender contacts can be the difference between a successful outcome and mortgage rejection.
Remortgages can be harder to arrange, and while you won’t typically be offered the same competitive rates as someone with cleaner credit, this doesn’t mean that you should settle for less.
It may be possible to remortgage with a variety of previous bad credit on your credit file, including, mortgage arrears, IVAs, defaults and CCJs.
For more information on how to remortgage with bad credit, have a look through our in-depth article or make an enquiry to speak with an expert in this area
As mentioned above, remortgages can be more difficult and you may not be offered the same competitive rates as someone with cleaner credit but it may still be possible to remortgage to pay off debts even with bad credit on your file.
We can, but it’s not often necessary to use a mortgage broker near you. This could limit your selection and reduce the odds of finding a bad credit expert who can get the results you’re looking for. Most lenders operate on a national basis. So, you want an advisor with the proper experience and contacts to explore your full range of borrowing options.
There is no ‘blacklist’ as such in the UK, but most bad credit on your records, including bankruptcy, gets wiped from credit reference agencies (CRAs) after 6 years. If you need to arrange a mortgage whilst your reports are still showing credit issues, there will still be options to explore such as putting down a larger deposit or even using a guarantor.
Get Started with a Mortgage Broker
Maximise your chance of approval with specialist advice from an expert in Bad Credit Mortgages