Compare our best bad credit mortgages

If you have a poor credit history or a black mark on your finances, you may still be able to get a mortgage. Banks and building societies have a range of deals that may be available to those with poor credit ratings. Explore our guide to learn more about bad credit mortgages and how to improve your credit history to increase your chances of mortgage approval.

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Mortgage amount

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Mortgage term

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Initial rate type

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Our best bad credit mortgage rates

  • Hanley Economic Building Society Discount mortgage

    Initial rate 3.59%. APRC 3.6%. Set-up fees £0
  • Darlington Building Society 2 Year Discount mortgage

    Initial rate 3.69%. APRC 5.2%. Set-up fees £1,119
  • Penrith Building Society 3 Year Discount mortgage

    Initial rate 3.75%. APRC 4.7%. Set-up fees £1,298
  • Darlington Building Society 3 Year Discount mortgage

    Initial rate 4.09%. APRC 5.2%. Set-up fees £1,119
  • We've found 11 mortgage deals

    Hanley Economic Building Society

    Discount

    Initial rate

    3.59%

    APRC

    3.6%

    overall cost for comparison

    Set-up fees

    £0

    Monthly payment

    £707.65

    Darlington Building Society

    2 Year Discount

    Initial rate

    3.69%

    until 31-03-2023

    APRC

    5.2%

    overall cost for comparison

    Set-up fees

    £1,119

    Monthly payment

    £715.22

    for 24 months

    Darlington Building Society

    2 Year Discount

    Initial rate

    3.69%

    until 31-03-2023

    APRC

    5.2%

    overall cost for comparison

    Set-up fees

    £1,119

    Monthly payment

    £715.22

    for 24 months

    Darlington Building Society

    2 Year Discount

    Initial rate

    3.69%

    until 31-03-2023

    APRC

    5.2%

    overall cost for comparison

    Set-up fees

    £1,119

    Monthly payment

    £715.22

    for 24 months

    Darlington Building Society

    2 Year Discount

    Initial rate

    3.69%

    until 31-03-2023

    APRC

    5.2%

    overall cost for comparison

    Set-up fees

    £1,119

    Monthly payment

    £715.22

    for 24 months

    Penrith Building Society

    3 Year Discount

    Initial rate

    3.75%

    APRC

    4.7%

    overall cost for comparison

    Set-up fees

    £1,298

    Monthly payment

    £719.78

    for 36 months

    Darlington Building Society

    3 Year Discount

    Initial rate

    4.09%

    until 31-03-2024

    APRC

    5.2%

    overall cost for comparison

    Set-up fees

    £1,119

    Monthly payment

    £745.95

    for 36 months

    Darlington Building Society

    3 Year Discount

    Initial rate

    4.09%

    until 31-03-2024

    APRC

    5.2%

    overall cost for comparison

    Set-up fees

    £1,119

    Monthly payment

    £745.95

    for 36 months

    Darlington Building Society

    3 Year Discount

    Initial rate

    4.09%

    until 31-03-2024

    APRC

    5.2%

    overall cost for comparison

    Set-up fees

    £1,119

    Monthly payment

    £745.95

    for 36 months

    Darlington Building Society

    3 Year Discount

    Initial rate

    4.09%

    until 31-03-2024

    APRC

    5.2%

    overall cost for comparison

    Set-up fees

    £1,119

    Monthly payment

    £745.95

    for 36 months

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    Representative example:

    If you borrowed £200,000 payable over 25 years, with an initial fixed-rate for two years at 4.79%, your monthly payments would be £1,144.84 for 24 months. This would then revert to a standard variable rate (SVR) of 4.24% for the remaining 23 years, costing £1,086.24 per month for 276 months. Overall cost for comparison is 4.5% APRC representative. The total amount payable over the full term would be £328,272, including product fee of £995 and interest of £127,277.

    Your home may be repossessed if you do not keep up repayments on your mortgage.

    Are mortgages for bad credit available in the UK?

    If you have a bad credit history, the good news is that this doesn’t automatically rule you out of the mortgage market, even if your record might put off many lenders.

    It may be tougher to get a mortgage if you have missed payments on your credit history, a debt management plan, county court judgement (CCJ) or have declared bankruptcy. You will usually need a larger deposit, the interest rate will be higher and there won't be as many mortgages to choose from - but it still may be possible to find a suitable mortgage.

    How to get a mortgage with bad credit

    Getting a mortgage with a bad credit ratingis possible but it is harder than usual to find a lender. Plus, there are a number of characteristics that you might find come as part of the package if you choose to take out a mortgage with bad credit.

    Higher interest rates

    Bad credit mortgages often have significantly higher interest rates. This means larger monthly repayments compared with 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 usually want a deposit of 15% – which is an LTV of 85% – or more.

    LIBOR tracked mortgages

    Some bad credit mortgages use interest rates that track the LIBOR (London InterBank 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.

    How to find the best mortgage lenders for bad credit

    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 available only through mortgage brokers. A mortgage broker will assess your individual circumstances and try to find a suitable bad credit mortgage for you.

    What factors do bad credit mortgage lenders consider?

    Each mortgage lender has its own way of calculating your credit worthiness. They will consider a wide range of factors when deciding whether you're a reliable borrower or not, such as:

    • Your mortgage application form Taking into account your income and any other debt obligations
    • Existing information about you Any information a lender already has about you, such as if you have a bank account with them
    • Their lending policy Each lender has their own lending policy which can differ from lender to lender

    Alongside the lender’s own criteria, your credit scores with rating agencies such as Equifax, Experian or TransUnion also play an important role. These give a lender a view of your credit history and public record data (e.g. CCJs, IVAs).

    Why your credit score is important

    When you make an application for a mortgage, lenders will work out your credit score so they can decide if you're a reliable borrower or not. A poor credit score could affect your chances of securing a mortgage, or reduce the number of lenders prepared to offer you a loan.

    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.

    What will affect my credit score?

    There are several factors that are likely to negatively affect your credit score, including:

    • Missing payments on other lines of credit
    • This can include loans, credit cards and hire-purchase agreements
    • A high level of debt
    • Too many recent credit 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
    • Not appearing on the electoral roll

    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 (or at all) in the past, lenders can find it hard to measure your credit-worthiness and how you manage debt. One way to demonstrate your credit-worthiness is with a credit building card. If you use it consistently for a while and always clear your balance or meet the minimum monthly repayments, 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 make sure you are always on time with your loan and credit card payments. Every time you make a payment on time, a positive trace is left on your credit record. Importantly, aim not to exceed your agreed credit or overdraft limits.

    Be patient with your score

    Be aware that building up your credit rating is usually quite a slow process. If you’ve recently applied for a few credit products in a short space of time, your credit rating may dip down, and it might not bounce back for about 6 months. If you think you may be rejected for a mortgage, it can be wise to hold off the application and wait until your credit score improves as every application for credit is recorded. Speak to a mortgage broker who may be able to help you obtain a soft credit check, which will not show on your credit record.

    How bad credit can affect different types of mortgage applications

    Having a bad credit history can have an impact on all types of mortgage applications, from buy-to-let to Right to Buy. So how does it 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, but a poor credit history could prevent you from accessing the best deals.

    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 as though you'll be overstretched with your borrowing, you're unlikely to be accepted.

    And remember that fees tend to be much higher with buy-to-let mortgages – and even more so if you have bad credit.

    Guarantor mortgage with bad credit

    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. That’s why guarantor mortgages can be appealing options for people with bad credit or no credit history.

    But the risk shifts to the guarantor, who will be legally responsible for paying your mortgage if you can't – and guarantors risk losing their own homes if you run into problems.

    And as with all other mortgage applications, the worse your credit score, the fewer borrowing options you will have available.

    Help to Buy with bad credit

    The Lifetime ISA (LISA) is a scheme that has replaced the Help to Buy ISA. It is designed to help first-time buyers save for a deposit. To help you reach your goal faster, the government will add 25% to your savings. You can deposit a maximum amount of £4000 a year.

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

    A Help to Buy equity loan, however, involves borrowing a percentage of your house deposit, so a bad credit score could affect your chances of approval for this type of mortgage.

    Shared Ownership mortgages with bad credit

    Shared Ownership aallows you to purchase part of a property (usually up to 75%) and to pay rent to a housing association on the remaining share at below market value.

    You'll need a mortgage to buy your share, and although it's possible to secure a home loan with bad credit, many lenders might be put off.

    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 process as with any other mortgage application.

    Again, having bad credit will make it harder for you to find a lender that's willing to offer you a deal.

    Compare other types of mortgage

    Edited by: Sebastian Anthony & Christina Hirst

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    Last updated: 15 December, 2020