Bad Credit Buy-to-Let Mortgages
Find out how to get a buy-to-let mortgage if you have bad credit and how to secure the best rate
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In this article, we’ll explain how you can still get a buy-to-let mortgage with bad credit, which types of credit issues lenders are more likely to accept and how a mortgage broker can help secure the lending you need.
Can you get a buy-to-let mortgage with bad credit?
Yes, it is possible, but you may have to pay a higher interest rate due to fewer lenders willing to consider your application.
A lot will come down to exactly what the bad credit issue was, how long ago it happened and why it occurred. The more minor the bad credit and the more time has passed since the better your chances of finding a good buy-to-let mortgage deal.
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How to get a buy-to-let mortgage with bad credit
Your first step should be to speak to a mortgage broker who specialises in bad credit and buy-to-let. Make an enquiry with us and we will match you with an advisor who has this knowledge and experience.
Your buy-to-let mortgage advisor will guide you through the following steps:
- Downloading your credit reports: You can do this through a free credit report trial and your broker will suggest ways to offset the risk posed by your bad credit, such as ways to build and repair it quickly
- Calculating your rental yield: We have a calculator you can use for this but getting bespoke calculations from your mortgage broker is recommended.
- Finding the best buy-to-let lenders for someone with bad credit: Your chances of rejection or ending up with an unfavourable rate are high if you go it alone, but your broker will have deep working relationships with the best lenders for you and may even be able to arrange an exclusive deal.
Which credit issues will lenders accept?
A credit issue could be anything from a single missed payment to bankruptcy or repossession, so let’s look at the potential range of issues that buy-to-let mortgage lenders might be willing to accept.
Below you will find them ranked in order of severity, from least (non-severe) to most problematic (very severe).
Very severe issues
How much deposit will you need?
The minimum deposit amount you will need to get a buy-to-let mortgage is usually 25%, but with bad credit, you will likely have to put down more than this.
The exact amount will depend on the age, severity and circumstances surrounding your credit issue, but needless to say, you are unlikely to be approved with less than 25-30%.
Which lenders will consider your application?
This very much depends on the credit issue and the lender, with the high street banks tending to be the most risk-averse.
Each lender has their own specific criteria for this and you can find specific examples of this below:
- TSB: says that customers with arrears may be considered subject to further checks, but also that they will automatically decline an application if there have been mortgage arrears of over £100 in the last 12 months.
- Shawbrook Bank: may consider a previous repossession acceptable if it took place over two years ago.
- Leeds Building Society: requires a minimum of 6 years to have passed before they will consider a buy-to-let mortgage applicant with a repossession on their file.
- HSBC: will not accept repossessions no matter how long has passed since it occurred.
Interest Rates on buy-to-let mortgages with bad credit
The table below offers an indication of the typical interest rates currently available for a buy-to-let mortgage, but with bad credit against your name, the rate you end up with could be higher than this.
How much higher will depend on the circumstances surrounding your bad credit, but the right mortgage broker could still help you secure a competitive deal.
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 October 2023
The rates quoted above were correct at the time of writing and are subject to change at the lender’s discretion. Speaking to a mortgage broker is the best way to keep track of the rates available at any given time.
Getting a Remortgage
If you’re thinking about remortgaging a BTL then the same basic rules apply in terms of how bad credit might impact your application. The other factor to consider with a remortgage is how much equity you have in the property and whether you’re looking simply to remortgage to a better deal or want to release equity as well.
Often remortgaging can be a little more straightforward than a new mortgage as you normally have a lower loan-to-value (LTV) ratio than when you first took the mortgage, meaning lower risk for lenders and potentially a better deal.
Remortgaging with the same lender might be another way to make things simpler if poor credit is an issue. If you’ve maintained a clean repayment record with your existing mortgage this will help too.
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Get matched with a buy-to-let mortgage broker
We’ll take a look at your circumstances and match you with a broker with experience in bad credit BTL mortgages, who can advise you on exactly what steps you can take to improve your credit score and guide you to the specialist lenders who will be most open to your application.
All of the advisors we work with have access to the whole of the market, including the niche lenders who deal specifically with these mortgages.
Our broker matching service is completely free of charge and there’s no obligation, so you’ve got nothing to lose.
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Maximise your chance of mortgage approval with a specialist in buy to let mortgages
A credit check is standard practice for mortgage applications, but for a BTL mortgage, there may be very specialist lenders who are prepared to forgo the checks and look instead at just proof of rental income as enough of a guarantee of your ability to make repayments.
This is very rare though and will likely have high interest rates attached, so you’re best talking to your broker about your options if this is something you want to do.
Yes, but your options may be very limited.
Regulated BTL mortgages – where you rent the property to an immediate family member – are already considered higher risk and so have a smaller pool of lenders offering them. A bad credit history will further shrink this pool, but your broker will be able to look at your particular circumstances and assess whether it’s possible.
No, not directly.
The maximum amount you can borrow will be assessed independently from your creditworthiness and this will be based on the property’s rental potential. Most lenders will require the projected rental income to cover the mortgage payments by 125% to 145%.
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