By Pete Mugleston | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.
Updated: 25th November 2019 *
People have bad credit against their name for all kinds of reasons, from historical mortgage arrears to having a home repossessed. While these issues can make approval more difficult, they don't have to be a deal-breaker if you know where to turn.
If you're one of the many who have a history of adverse credit, the good news is that the market is vast and there are deals out there for all kinds of borrowers, not just those with a pristine credit report.
It doesn’t matter if banks or other types of mortgage lender have turned you away in the past as, with the right advice, it may be possible for you to obtain a home loan.
Our guide to mortgages for bad credit borrowers will help you get started, but you can call us on 0808 189 2301 or make an enquiry and we'll match you with one of the experts we work with for a free, no-obligation chat.
The following topics are covered below…
- What are bad credit mortgage loans?
- Can I get a mortgage with bad credit history?
- What are bad credit mortgage lenders?
- What credit issues will a mortgage lender accept?
- What else impacts eligibility?
- Which credit issues are classed as the most severe?
- How to get the best rates
- Getting a bad credit mortgage with good income
- Getting a bad credit mortgage with low income
- How to improve your credit rating
- Can I get a mortgage with a low credit score?
- How much deposit do you need if you have bad credit?
- Can I remortgage my home with bad credit?
- How to apply for a mortgage with bad credit
- Fees and charges
- Frequently asked questions
- Speak to a poor credit mortgage expert
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What is a bad credit mortgage?
A bad credit mortgage is simply a mortgage for borrowers with an adverse credit history, poor credit score, or low credit rating. Not all UK mortgage lenders offer bad credit loans and the rates offered might be higher than for customers with clean credit, but with the right guidance, it may be possible to find a competitive deal for you.
This is because niche financial products like bad credit mortgages are usually provided by specialist mortgage lenders, who often base their lending decision on the age, severity and cause of the credit issue in question, as well as how likely they are to reoccur.
What's bad credit?
Put simply, if somebody has 'bad credit' it means they have a history of failing to keep up with one or more previous credit agreements.
This could be the result of failing to pay priority credit commitment(s) on time, or failing to pay them full stop. This information will be held on your credit report and it can make future applications for credit more difficult.
Can I get a mortgage with bad credit history?
Yes, in many cases you can still get a mortgage with bad credit.
Although some high-street mortgage lenders will turn you away if you have financial problems such as adverse credit, some providers will base their lending decision on the severity of the credit problems, how long they’ve been in your credit history, and how closely you meet their other eligibility and affordability requirements.
What is a bad credit mortgage lender?
Simply put, they’re mortgage providers who specialise in customers with adverse against their name. While some mainstream firms might turn away borrowers who've experienced financial difficulties, specialist lenders base their decision on the severity of the issue, the age of it, and how closely the borrowers meets their other eligibility requirements.
There are many different kinds of bad credit mortgage lenders, including providers who specialise in…
- First-time homebuyers with bad credit
- Customers with low/no credit score
- Every other type of adverse credit
The expert mortgage brokers we work with also specialise in bad credit and they have access to every adverse credit mortgage lender on the market.
Make an enquiry to speak with one today for the right mortgage advice and to be connected to the best provider for you. The mortgage brokers we work with are regulated by the Financial Conduct Authority (FCA) and are best-placed to offer you advice.
How bad credit mortgage lenders 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 would avoid being rejected for a home loan. 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, defaulted on previous financial agreements or been hit with CCJs, IVAs or 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 mortgage lenders determine eligibility?
There are two main things involved in assessments when bad/poor credit is a factor:
- The type / severity of the issue
- The date it was registered
The type of 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 providers for customers with 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 their service once a certain passage of time has elapsed.
For example, anyone who has experienced bankruptcy is 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, interest 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.
Who are the best mortgage lenders for bad credit customers?
Who we’d deem are the best companies 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 providers 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 an independent broker working in the market every day, who has their finger on the pulse!
Bad credit mortgage lenders operate all over the UK, but some have postcode restrictions outside of England. Certain providers in Scotland, for example, won’t lend in the Highlands or off the mainland, and you’ll find it’s a similar situation in Northern Ireland.
However, the advisors we work with have access to every one of the adverse credit mortgage lenders in Scotland and every poor credit mortgage provider in Northern Ireland. If there’s a deal you’re eligible for, they can find it for you.
What credit issues will a mortgage lender accept?
Some mortgage lenders (high-street ones, in particular) might offer you unfavourable rates if you have any type of adverse in your credit report, while others may turn you away altogether.
Specialist providers, however, often take a more flexible approach to mortgage customers with a poor credit history, and can offer a lifeline to those with any of the following…
- No credit history
- Low credit score
- Late payments
- Missed mortgage payments
- Debt management schemes
- Payday Loans: Read about how payday loans can lead to rejected mortgage applications
- Customers with multiple credit problems
If you approach a lender who specialises in adverse credit, it may be possible to get approved for finance with a poor credit history. These providers often base their lending decision on the cause and severity of the adverse, the age of the credit issue, and how closely you meet their other eligibility and affordability requirements.
What else impacts eligibility besides my credit rating?
Although a mortgage provider will look at your credit history when assessing your application, they might also base their lending decision on the following variables…
- Your income and employment status:
The more you earn, the more you could borrow, but how you make your money will also be of interest to the lender when they're calculating the size of your mortgage. A specialist provider might be needed if you’re self-employed or make a significant amount through bonuses, overtime or commission.
- Your deposit:
The minimum deposit sum you’ll need for a residential property is 5% (although some providers will want more) or 15% for a buy to let. Putting down more, however, can minimise some of the perceived risk your bad credit creates.
- Your age:
Some firms 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 mortgage debt in retirement.
- Your outgoings:
Other significant outgoings (such as outstanding loans or dependent children) may affect the amount you’re able to borrow.
- The property type:
Properties with non-standard construction (i.e. thatched roof, timber frame, etc) might require a specialist.
For more information about how meeting the above criteria can help you get a mortgage with bad credit, make an enquiry today to speak with an expert.
Which credit issues are classed as the most severe?
While getting a mortgage with poor credit is possible, you may find it more difficult if your credit issue is a repossession or bankruptcy, as these are considered to be the most severe types of adverse.
At the other end of the scale, things like a missed phone bill payment are the easiest for a wide range of different lenders to overlook.
Do high-street lenders offer bad credit mortgages?
Not always, and the ones which do might offer unfavourable rates.
A bad credit lender will take factors such as how long the adverse has been on the borrower’s credit report (the longer, the better) and the amount of deposit they have. The tables below will give you an idea of how likely you are to get a mortgage 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||Yes (If credit report is unaffected)||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||Possible with a 25% deposit||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 were correct at the time of creation (August 2019). Get in touch and an expert will go over any updates with you.
If you have any type of bad credit and need a mortgage loan, get in touch and the independent brokers we work with will search the entire market for the lender best positioned to offer you a favourable deal based on your needs and circumstances.
How to get the best rates on bad credit home mortgage loans
Because mortgage rates are always in flux and can change at any time, getting an average figure for a bad credit loan is often ineffective. However, there is a way to ensure you’ll end up on the best rates.
As a borrower with a poor credit history, the key to finding the most favourable interest rates is having access to the entire market and meeting the eligibility and affordability requirements for as many lenders as possible.
The experts we work with have this whole-of-market access. For a free, no-obligation chat about mortgage rates, make an enquiry today.
Getting a bad credit mortgage with good income
Income specifics can be vital to a mortgage application because most providers cap the size of a residential home loan at x4.5 the borrower’s salary, others will go up to x5 and a minority will stretch to x6 under the right circumstances.
If you’re on a high wages and after the maximum mortgage loan possible, you will need to find a firm that would be willing to offer the highest multiple of your wage. With bad credit, this can be tricky as some providers will see you as high risk.
However, with access to the entire market via an expert broker, it may be possible to find a niche lender who is flexible with bad credit and an expert in your income type.
Make an enquiry to get started.
Getting a bad credit mortgage with low income
This can be trickier as low income and poor credit are considered niches in the world of borrowing, but with whole-of-market access, it may be possible to find a lender that specialises in borrowers who fall into both categories.
There are a number of options available for borrowers with low salaries, including guarantor mortgage products, supplementing income with things like benefits (some providers allow this) and government schemes such as Shared Ownership.
A joint owner, sole proprietor mortgage may be an option (especially for first-time borrowers), as this mortgage type allows a second party (typically a parent) to help the applicant buy a home without featuring on the title deeds. The additional security of a extra capital and/or good credit rating could make it easier to get accepted.
Get in touch and the advisors we work with can discuss your low income and bad credit options with you.
How to improve your credit rating for a mortgage
If you're looking for a mortgage (whether you have bad credit or not), it's always a good idea to get your credit history into the best possible shape before applying, and these tips will help you do that.
1. Check your credit reports – all of them
Mortgage lenders will base your credit history on data from one or more of the UK’s three main credit reference agencies: Experian, Equifax and Callcredit.
It’s a good idea to check your report with each of these agencies to make sure it’s up-to-date. It’s important to scrutinise your files and challenge anything that might be inaccurate and dispute it if so, for example:
- Outdated bills
- Wrong address
- Missing electoral register information
- An outdated financial association (such a family member/partner)
- Bank/credit accounts no longer in use
Also, keep in mind that not all of the agencies store the same data on you, and not every lender uses the same one. Therefore, just because one agency lists credit issues against your name, that doesn’t mean finding a favourable deal is impossible.
You can check your credit history for free through the link below the next step or we can do it for you if you make an enquiry.
2. Be an active borrower
Customers often ask us “Can I get a mortgage with no credit score?” and while it may be possible to get a mortgage with no credit history, there are steps that you can take to make sure you have at least some borrowing record to speak of. There are adverse-specific credit cards you can take out.
If you spend on one of them and repay the balance in each month, this will help prove that you can borrow and live within your means. Your credit will likely improve in a matter of months.
Can I get a mortgage with a low credit score?
Yes, you can. While there isn’t one universal credit score, some mortgage lenders run a credit check on your file and score you based on how well you meet their lending requirements. For low credit lending, some may have more lenient requirements, while others won’t focus on your credit report and base their decision on an underwriter’s approval instead.
Your credit score is based on data from the UK’s three main credit reference agencies:
- Experian – score out of 900, a good score is 700+ and 800+ is considered excellent
- Equifax – score out of 700, anything above 475 is considered excellent
- Callcredit – score out of 700 and then assign you a rating between 1 and 5 (1 being the lowest and 5 is outstanding)
Most lenders who have an appetite for adverse credit are more concerned with the substance of your credit history and the overall strength of your case, so even if one of the credit reference agencies is giving you a very low score, that doesn’t necessarily mean you can’t get approved.
Remember, these firms only see your credit history, they don’t have access to things like your income, which lenders will always look at when they assess your application.
Some firms will lend up to 95%, meaning you’d only require a 5% deposit, but you would need to meet other strict criteria. So, while it is possible, it’s far from straightforward and not something everyone would be able to benefit from.
For example, lots of first-time buyers can have low credit scores because they’ve never had credit before and yet it’s still possible to get 95% mortgages. However, this is based purely on a low credit score, not necessarily because of bad credit on your history.
Some of the expert brokers we work with have even helped clients with close to zero credit scores.
Every situation is different and, when it comes to bad credit mortgage products, each specialist provider has different criteria and affordability requirements so to find out what sort of terms you might be able to get your best bet is to talk to a specialist whole-of-market broker.
Call 0808 189 2301 or make an enquiry for a free, no obligation chat with one of the experts we work with and find out what sort of mortgage term you might qualify for, even with a low credit score or poor credit history.
How much deposit do I need for a mortgage with a bad credit rating?
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 lenders will only offer you a mortgage if you put down more, depending on the age and severity of the issue.
For example, those with a repossession against their name may be able to get a mortgage from specialist lenders within 1–3 years if they put down a 25% deposit.
Those with an individual voluntary arrangement (IVA) will need between 10-25% deposit, depending on how long is left to run on the debt, and those with a bankruptcy will need between 15-25% in the first three years.
With the help of a specialist broker who has access to every bad credit lender on the market, it may be possible to get a 95% LTV mortgage with minor bad credit, as long as you meet the provider’s other eligibility requirements.
However, you might struggle to get a loan with severe adverse, such as a bankruptcy or repossession, history as these issues usually call for a larger deposit amount to offset the risk, especially if they’re less than three years old.
That isn’t to say it’s impossible to get a 95% LTV bad credit mortgage with these issues against your name, but specialist advice will be essential.
It may be possible to find a 90% mortgage with bad credit, assuming you meet all of the lender’s general eligibility and affordability requirements.
You might, however, struggle if you have severe adverse, such as a recent bankruptcy, repossession, or IVA. The specialist banks and other niche mortgage lenders who offer products to borrowers with these credit issues usually need around 25% deposit, if the credit problem is less than three years old.
It may be possible to find a mortgage provider who is willing to offer you a 50% LTV mortgage with bad credit, as a deposit this substantial will offset the risk involved in the deal.
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.
100% mortgage / no deposit
This will prove difficult as lenders generally don’t offer 100% mortgages to customers with bad credit, or anyone else, for that matter.
One of the only ways to get a residential mortgage 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 a bad credit family springboard mortgage), 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.
Getting a guarantor mortgage with bad credit is the same as applying for any other kind of mortgage under these circumstances. If a provider considers you too high risk due to your adverse, having a guarantor is unlikely to change their mind on that.
Borrowing a deposit
If you’re looking for a mortgage with no deposit and bad credit in the UK, another option might be to borrow the funds. However, you should be aware that many lenders will frown upon customers using personal loans to cover the deposit and going down this path could jeopardise your application.
A more viable options might be to borrow the funds from your family. Most lenders are okay with gifted deposits, as long as the borrower is under no legal obligation to repay the money.
Other types of bad credit mortgages
In addition to lenders who specialise in standard bad credit customers, the brokers we work with also have access to adverse credit mortgage providers who welcome customers who fall into all kinds of other niches too, such as...
- Second home buyers
- Secured loan customers
- Those in the market for large loans
- And many other niches
Are there bad credit mortgage lenders for expats?
Yes, in the right circumstances. Most mortgage companies for bad credit applicants will only secure debts 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.
Can I get an expat mortgage with bad credit?
Yes, it may be possible, whether you’re buying a house in the UK or purchasing abroad. Bad credit is a common issue for expatriates since living abroad means that lenders might not be able to trace any credit history.
Anyone who falls into this category can be considered a larger risk in the eyes of some providers, and any additional adverse that might be on their credit history only ramps this risk up further. There are, however, specialist lenders who deal with expat borrowers every day.
The advisors we work with may be able to connect you with a lender that is well positioned to cater to a borrower who falls into both the expatriate and bad credit niches. Make an enquiry to speak with one of them today.
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 salary 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 home loan on a property valued at £100,000 would have an 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.
Second charge mortgages
A 2nd charge mortgage (or a homeowner loan) is a loan secured against a property you own, which basically functions as a second mortgage.
They’re available to customers with credit problems (as long as they pass the eligibility checks) and might be a viable option if you need funds for consolidating outstanding debts, house improvements or any other legal purpose, and have been turned down for remortgage deals.
Loan-to-value ratios and affordability can be more flexible on 2nd charge agreements compared to mortgages and remortgages. It might even be possible to borrow up to x10 your earnings, and adverse credit is typically less of an issue than with primary finance. Find more information 2nd charge mortgages on our main hub.
Alternatively, make an enquiry and we'll match you with one of the experts we work with. They can assess your current circumstances to find the most suitable second charge mortgage lenders.
How do I get a mortgage with bad credit?
Here’s how you go about getting it...
- Get your credit reports
The should be your first port of call, as checking which credit issues are showing up on your Experian, Equifax and Callcredit reports will give you a good idea of the mortgage providers you’re able to approach. They'll show your past loans, credit cards, overdrafts and even some utility bills. Remember, all three files can differ in terms of what they include, so it may be possible to find a lender who will offer you a favourable deal even if one or more of the agencies reports issues. By obtaining data from the three agencies, you can also make sure they’re up-to-date and challenge any potential mistakes. You can request your records through the links below or making an enquiry with us.
- Raise as much deposit as possible and carry out credit repair
Next, you should optimise your credit rating in preparation for your application, to minimise any risk the lender might feel your adverse creates. See the section titled ‘How to improve your credit rating for a mortgage’ for tips on how to do this. It may also be a good idea to raise as much extra deposit as you can at this stage, because putting down extra can also offset some of the risk involved in the deal.
- Avoid multiple searches
Making multiple applications online or approaching a mainstream bank for a bad credit mortgage loan comes with the risk of being turned away. This is because not all lenders cater for customers with adverse and having a number of ‘hard’ credit searches on your credit profile can further jeopardise your mortgage chances.
- Find a whole-of-market broker
The best way for someone with a poor credit history to apply for a mortgage is through a broker with access to the whole market. That way, you can rest assured that the most favourable deals you’re eligible for will be within reach. Here’s what you should look for in a bad credit mortgage broker…
- Whole of market & independent
- Reasonable and fair fee structure – they should only bill you on success
- Gives you access to direct deals
- Has exclusive products
- Has links with commercial finance
- Is whole-of-market for insurance
- Has years of experience
- Has plenty of happy customers
The advisors we work with have been hand-picked to ensure they have all of the above qualities, and they have a strong track record of arranging mortgages for people with poor credit history.
Get in touch to speak with one of them for a quote today.
How to apply
As we mentioned in the section above, the best way to apply for a mortgage with bad credit is to contact a whole-of-market broker to make sure you have access to all of the best deals you’re eligible for.
Fees and charges
If you have bad credit, the additional costs and fees you’ll be expected to foot are usually no different. They may include…
- Arrangement fees
- Booking fees
- Valuation fees
- Legal fees
- Stamp Duty
- Early repayment charges and exit fees
You should note that you may not have to pay all of the above, as some lenders offer inclusive deals and things like Stamp Duty may not be payable in certain scenarios.
Bad credit borrowers should also bear in mind that the additional fees they’re asked to pay might be somewhat higher than a customer with pristine credit, but that doesn’t mean finding a favourable deal is impossible.
Frequently asked questions
Here you will find additional information about how bad credit can affect a mortgage application, based on the questions we’re most frequently asked.
Can I get a mortgage with no credit check?
Not exactly. While it’s impossible to get a mortgage loan with no credit check in the UK, lenders aren’t generally interested in your credit ‘score’ – they’re interested in how your specific history fits in with their lending criteria.
In the UK, there is no set minimum credit score to qualify for a mortgage, but if yours is particularly low, it may be possible to find a lender that ‘checks’ rather than ‘scores’.
Make an enquiry to speak with a whole-of-market expert about this.
Can I remortgage with a bad credit rating?
If you have bad credit and would like to remortgage you might well be in luck, as remortgaging with bad credit is often much easier than buying a home with adverse.
Borrowers in this scenario usually have two options: a full refinancing of their debt, or taking out a second charge mortgage for borrowers with bad credit.
For further information about how to remortgage your home with bad credit, check out our guide to bad credit remortgages.
Can I get a second mortgage with bad credit?
As long as you can pass the affordability checks, most lenders will likely be happy to approve your application for a second mortgage 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 mortgage, the lender’s 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 mortgage lender’s critera. You’ll also need to meet the lender’s deposit requirements, and if you have poor credit, you may need to put down a larger deposit.
To ensure that you find the right lender, speak with an expert. The independent advisors we work with have whole-of-market access, meaning that they can find you the best deals even if you have bad credit.
What are my chances of getting a mortgage with bad credit history?
Firstly, they will be higher if you approach a whole-of-market mortgage adviser who has access to every adverse credit lender on the market.
Secondly, your chances of getting a mortgage with bad credit will likely come down to the severity of the credit issue(s), how long they’ve been on your record, and how closely you meet the lender’s other mortgage eligibility and affordability requirements.
Can I get a mortgage with really bad credit?
Many customers have asked us whether there are home loans for people with really bad credit, and the answer to this question will vary from lender to lender.
The most severe forms of adverse credit are bankruptcies and repossessions, and there are a minority of specialist lenders who may consider offering mortgages to borrowers who've had these issues. Their lending decision will mostly come down to how long ago the issue was discharged.
Do I need to pass a credit check to get a mortgage agreement in principle approved?
No lender in the UK can offer a guaranteed mortgage approval if you have bad credit. All of them will perform some kind of credit check before offering you a decision in principle, and whether this will leave a mark on your report depends on the provider.
Some only perform a ‘soft’ search at this stage, while others perform a ‘hard’ credit check. You should avoid having too many hard searches in your credit history, where possible.
How easy is it to get a mortgage with bad credit?
It can be more difficult than for borrowers with a clean credit rating, as fewer lenders are willing to take a risk on adverse credit customers. However, that doesn’t mean finding a favourable deal is impossible.
Whether you have a hard time finding a bad credit mortgage or not may come down to the severity of your credit problems, how long they’ve been on your file, and how closely you meet the other items on the specialist lender’s eligibility checklist.
Can I get a mortgage with no credit history?
Most high-street lenders will decline a customer who has a low credit score or no credit history, but a specialist provider may consider offering you a deal if you meet their other eligibility and affordability requirements very closely.
Moreover, there are steps you can take to build up some borrowing history. See the section titled ‘How to improve your credit rating for a mortgage’ for more info.
Are there mortgages for first time buyers with bad credit history?
Yes, products are available for first-time buyers with poor credit history, but seeking specialist advice is highly advisable because some lenders consider first-time buyer mortgages to be higher risk 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 (such as Help to Buy) to get a mortgage with bad credit. However, a more flexible lender might permit it, as long as you meet their other requirements.
Another thing to consider is that bad credit mortgages come with larger deposit requirements that some first-time buyers might struggle to meet, but if you make an enquiry, the advisors we work with will help you find the lender best positioned to help a first-time buyer with your needs, circumstances and credit history.
Can I get more than one mortgage with bad credit?
It may be possible, as there are 2nd mortgage loans aimed at bad credit customers, and even lenders who offer these products to customers in the market for a third property. They are harder to come by where second and third homes are concerned, though.
Factors like the loan-to-value ratio, income requirements and affordability assessments can be more stringent when you’re buying a second home, and a higher number of lenders will respond with an outright ‘no’ to customers with bad credit.
This is because 2nd and 3rd mortgages are higher risk in general, since the borrower will already have significant outgoings on their existing home.
With the help of a whole-of-market broker, you may be able to find a lender with a high appetite for risk who’s willing to offer a deal to a second or third home buyer with poor credit.
How far back do mortgage lenders look at credit history?
Most lenders will typically look at the last six years, as six years 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 mortgage, depending on the severity of the issue and when it was registered.
Can I get an interest-only mortgage?
It may be possible to get an interest-only mortgage with bad credit, if you can prove to the lender that you have a viable repayment vehicle to settle up at the end of term.
Residential interest only mortgages are less common than capital repayment mortgages, and your bad credit will almost certainly make one harder to obtain by reducing the number of approachable lenders.
If you're interested in taking out an interest-only mortgage, getting specialist advice before you dive in is essential.
Can I get a self-build mortgage?
It might prove difficult to get one of these products with bad credit, but it's by no means impossible.
Self-build mortgages are designed for those with the means and expertise to build their own property (or at least oversee the construction of it). This is often builders but these products are no exclusively aimed at tradesmen.
They are harder to come by than regular residential deals because the borrower must prove they are capable of seeing the project through and that the final build value will line up with the original valuation.
With this in mind, the level of risk is often higher than for a conventional mortgage and, as a result, not all lenders offer self-build loans. With bad credit against your name, the number of approachable providers will be even smaller.
That said, finding a lender who caters for self-build applicants with poor credit isn’t out of the question if you have whole-of-market access, so make an enquiry to speak with one of the specialist brokers we work with today.
Can I get a contractor mortgage with bad credit?
Possibly, yes. There are specialist mortgage providers who cater to the type of contractors listed below, and some of them deal with bad credit, too.
- Self-employed contractors with an adequate history of accounts
- Employed fixed/short-term contractors
- Contractors/employees of umbrella companies
- Zero hours contracts with 6-months' working history
- Agency workers
Whether one of these contractor lenders can offer you a deal might come down to factors such as how long you’ve been employed in that capacity, whether you’re contract has been renewed before, as well as the severity of your adverse credit.
Can I port my mortgage?
Mortgage porting (transferring a debt from one property to another) is theoretically possible with bad credit.
The process isn’t all that different to applying for your existing mortgage product from scratch, so whether you’re successful will depend on the lender’s stance on the severity of your credit problems, how long they’ve been on your report, and how closely you meet their other requirements.
Are there small mortgage loans for customers with bad credit?
Yes, the size of the mortgage you will get is all about affordability, offset against factors such as your credit rating. What’s ‘small’ to a borrower with high income might be substantial to somebody on a relatively low salary, but the amount a mortgage provider is willing to offer you will be capped based on multiples of your salary.
See the ‘How to get a mortgage with bad credit but good income’ section for more information.
Can I get a commercial mortgage with bad credit?
Yes. This is certainly possible as commercial mortgage lenders operate on an unregulated basis, so they have a degree of flexibility when it comes to who they offer finance to and under what circumstances.
Like with residential mortgages, a specialist mortgage lender might be called for if you're seeking a commercial mortgage with severe types of adverse credit on your file, especially if the issue(s) could potentially affect the viability of the investment.
You can find out more in our guide to bad credit commercial mortgages.
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How do I find the best bad credit mortgage deals?
Since every lender uses a different mortgage calculator, you'd need to carry out a comparison across the entire market, but this can be time-consuming and could potentially add further unwanted marks to your credit profile, since having too many hard searches on there is not recommended.
Approaching a whole-of-market broker is a better alternative to doing the legwork yourself. They can narrow down all the best bad credit mortgage deals that you qualify for based on your needs and financial situation.
Make an enquiry and we'll have one of the experts we work with compare bad credit mortgage deals for you to help you find the best rates.
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*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.
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 OMA of course! Read more about Pete here...
Bad Credit Mortgage Information
Looking for specialist advice? Read through our articles about different types of bad credit situations, and how best to prepare yourself to find the right mortgage for you