Compare our best bad credit mortgages

If you’ve had bad credit in the past, you could still be able to get a bad credit mortgage. Banks and building societies have a range of bad credit mortgages that may be available to those with a poor credit rating.

Can I get a mortgage with bad credit?

Yes, you might still be accepted for a mortgage in the UK, even if your bad credit record might put off many lenders.

How to get a mortgage with bad credit

Getting a mortgage with a bad credit rating is possible but it will be harder than usual to find a lender.

Higher interest rates

Bad credit mortgages often have a significantly higher interest rate. This means larger monthly repayments compared to a normal fixed or discount mortgage.

Larger deposits

You’ll probably need a larger deposit as well. A 5% or 10% deposit is usually enough for a fixed or discount mortgage. But bad credit mortgages will want a deposit of 15% – LTV of 85% – or more.

LIBOR tracked mortgages

Some bad credit mortgages use an interest rate that tracks the LIBOR (London Inter Bank Offered Rate). This is the rate used by banks when they lend money to each other.

If you get a LIBOR tracker mortgage, your interest rate will track the LIBOR for a set amount of time. Then, like other mortgages, it will revert to the lender’s standard variable rate (SVR). This is usually a couple of percentage points higher.

Bad credit mortgage lenders

If you have bad or adverse credit, you may need the help of a mortgage broker to find a bad credit mortgage lender.

Most bad credit mortgages are only available through a mortgage broker. They'll assess your individual circumstances and try to find a bad credit mortgage for you.

Understanding credit scores for your mortgage

When you make an application for a mortgage, lenders will work out a credit score for you to decide if you're a reliable borrower or not. A poor credit score could affect your chances of securing a mortgage.

What is a good credit score for a mortgage application?

Usually the better your credit record, the better your chances are of securing a mortgage to buy a house or property. There is no minimum credit record or rating for getting a mortgage, but in general you want your credit record to be as clean as possible before applying for a mortgage.

Each mortgage lender has a different way of calculating your credit worthiness. Your credit scores with Experian or TransUnion are important, but only part of the story. Lenders will consider a wide range of factors when deciding whether you're a reliable borrower or not, such as:

• Your complete credit file
  Things like your credit history and public record data (e.g. CCJs, IVAs)
• Your mortgage application form
• Existing information
  Any information your lender already has about you. For example, if you have a bank account with them
• Lending policy
  Each lender has their own lending policy which can differ from lender to lender

How do you get a bad credit score?

There are a few factors that are likely to give you a bad credit record:

• Missing payments on other lines of credit
  Things like loans, credit cards, overdrafts, etc.
• Generally high levels of debt
• Too many recent applications
  For credit cards, mortgages, store cards, etc.
• Exceeding an agreed credit or overdraft limit
• Being financially linked to someone who has bad credit
  Through a joint bank account or a mortgage
• County court judgments (CCJs)
• Bankruptcy

How to improve your credit score?

If you want to improve your credit record and gain access to better mortgages and other credit products, there are a number of things you can do.

Credit building card

If you haven’t borrowed much in the past, you could get a credit building card. If you use it consistently for a while, your credit record should improve.

Keep up with your payments

Probably one of the most important ways to build up a positive credit record is to always be on time with your your loan and credit card payments. And don’t exceed your agreed credit and overdraft limits.

It might take time

But be aware that building up your credit rating is usually quite a slow process. For example, if you’ve recently applied for a few credit products, your credit rating may dip down. And it might not bounce back for about six months.

How a poor credit score affects you across different mortgages

Whether you're a first time buyer with poor credit or just looking to get a mortgage, you've probably considered a number of different mortgage options and schemes. But how does bad credit affect your likelihood of getting accepted?

Buy to let mortgage with bad credit

It's possible to get a buy to let mortgage with bad credit, however a poor credit history could prevent you from getting the best deals.

Your affordability will also be taken into account. Lenders will look at a combination of the rental income the property can achieve and your circumstances. If you look like you'll be overstretched with your borrowing, you're unlikely to be accepted.

Also, fees tend to be much higher with buy to let mortgages, especially if you have bad credit.

Guarantor mortgage with bad credit

If you have bad credit, lenders will view you as a risk making it less likely they'll accept you for a mortgage.

With a guarantor mortgage, your guarantor agrees to make your repayments for you if you fall behind on your payments. This reduces the risk for the lender, making you more likely to be accepted.

But the risk shifts to the guarantor. They'll be legally responsible for paying your mortgage if you can't and could risk losing their own home.

Help to Buy with bad credit

The Help to Buy ISA is a government scheme designed to help first time buyers save for a deposit. To help you reach your saving goals faster, the government will add 25% to your savings up to a maximum of £3,000 on savings of £12,000.

Even if you have a low credit score, you can still get a Help to Buy ISA. That's because you're saving money, not borrowing it. So you won't need need to pass any credit or affordability checks to apply.

A Help to Buy Equity Loan however is a form of borrowing. So a bad credit score could affect your chances of approval.

Shared Ownership mortgages with bad credit

To buy through the Shared Ownership scheme, you'll need a mortgage.

Though it's possible, if you have bad credit, many lenders might be put off from offering you a mortgage. Without securing a mortgage, you will not be able to proceed with the scheme.

Right to Buy mortgage with bad credit

If you're looking to buy your council house through the Right to Buy scheme you'll need to get a mortgage.

The landlord you're buying the property from is not responsible for helping you finance the purchase of your home. So you'll have to go through the same mortgage process as anybody else who's applying without the Right to Buy scheme.

As with any mortgage, having bad credit will make it harder for you to find a lender that's willing to offer you a mortgage. Without a mortgage, you will not be able to secure your Right to Buy property.

Compare other types of mortgage

• Fixed-rate mortgages
• 2-year fixed-rate mortgages
• 3-year fixed-rate mortgages
• 5-year fixed-rate mortgages
• 10-year fixed-rate mortgages
• 60% LTV mortgages
• 85% LTV mortgages
• 90% LTV mortgages
• 95% LTV mortgages
• 100% LTV mortgages
• Buy to let mortgages
• Interest only mortgages
• Guarantor mortgages

Edited by: Sebastian Anthony & Christina Hirst

Last updated: 10 July, 2019