Bad Credit Mortgages

How does having bad credit affect my ability to get a mortgage?

People think that bad credit stops you getting a mortgage – it absolutely doesn’t. A lot of the clients we work with have bad credit. We also have clients come to us that don’t think they’ve got bad credit – but they find a few surprises they didn’t realise were there.

Bad credit doesn’t stop you, but we need to be super organised. With everything in front of us we can put ourselves in an underwriter’s shoes to understand your case. We look at why you’ve got the bad credit, how it looks to a lender and how best to package it to look as appetising as possible.

Are there specific lenders who specialise in mortgages with bad credit?

There are. As a business, we separate lenders into three categories – high street lenders, building societies, and specialist / subprime lenders.

The high street lenders typically have the most attractive interest rates and cheaper products, but they are very vanilla and tend to take a ‘computer says no’ approach. These are best for people with relatively straightforward circumstances.

As a middle ground, we’ve got building societies. Most of them are relatively small and are funded by the people that own the society, so they can be very niche in what they do.

Some building societies will give somebody a mortgage if they’ve got an active Individual Voluntary Agreement (IVA) that hasn’t been settled.

You might think getting a mortgage with an IVA is impossible, but building societies will allow it. Because they are small, they can adapt and overcome issues, and it’s a very manual decision process. We can talk to an underwriter about your case and put our point of view across.

Pricing with building societies sits between the high street and specialists. It can be a good option for somebody with quite historic or very minor credit issues that don’t quite fit the high street. They may also accept a low credit score or somebody with only one year’s self-employed or contracting history, at reasonable interest rates.

Specialists or subprimes then take the rest of the cases. Where there’s risk, there’s more money involved for the lender. Some subprime lenders are funded by private equity firms. We’ve got a good reputation and a good relationship with quite a few specialist lenders, and even if something doesn’t quite fit their policy we can often get it placed.

Sometimes good income or a good track record can sway a decision with a lender. If your case has a few positives it might be something they can take. There’s a lender out there for most people.

What is considered bad credit in the UK?

The least severe is a late payment, where perhaps your credit card was due on the 20th and you paid it on the 22nd. The opposite end of the scale would be a bankruptcy. In between that you have CCJs, IVAs, defaults (or a trust deed in Scotland) and debt management plans. Everybody in those categories can be helped.

Sometimes what a lender deems as bad credit is not what I would. Missing a payment on a credit card might just have been an admin error – you had the money and had just not made the payment. That person shouldn’t be penalised because they forgot or they’ve had something going on.

If you just have a low credit score, we can probably get you a good deal on a mortgage. It’s likely to be better than for someone with CCJs, an IVA or bankruptcy, but all those things are considered bad credit.

It’s important when the bad credit happened. The further away it goes, the better it is for the client. There are also lenders that ignore certain things, such as parking tickets. If we understand where the bad credit has come from and the story behind it, we’ll find somebody to take it.

Can I still get a mortgage if I’ve had previous bankruptcy or foreclosure/repossession?

Lenders look at how recent the bankruptcy was. Believe it or not, if you were discharged from being bankrupt yesterday, I could get you a mortgage today.

As you can imagine, it’s super high risk for a lender. They certainly ask questions about where your deposit has come from if you’ve just been through a bankruptcy, but it’s possible. A bankruptcy won’t stop you getting a mortgage, but it will definitely impact the interest rate you’ll pay.

It’s a short-term fix, effectively. You might be buying a house to avoid renting after your bankruptcy. In a few years, you might sell and buy a bigger one. Our advice is tailored to the individual’s circumstances, so we can’t go into too much detail, but we can help.

What happens if I’ve been declined for a mortgage with bad credit previously?

If you engage with a broker, please be honest. If you’ve been declined somewhere else, the lenders can see that. So be honest with us and tell us why you’ve been declined. We can package that case differently or give an explanation behind it to a lender.

Underwriters like an explanation. As they read through someone’s circumstances, they draw a mental picture of what this person is like. If they understand bad credit was caused by a life event, that can change their view.

Honesty is everything. Be clear about what you’re looking for and the issues you’ve had in the past – that helps us massively. I’ve missed payments in the past myself. Not many people out there haven’t. You might be busy with your kids, or things are going on in your life, or you might just run out of money in one month.

Don’t be embarrassed, just be very clear about your expectations, what’s happened and where you’ve been. We can definitely help you. Sometimes I’ll sit down with somebody.

Recently I had a client whose overdraft use was a concern. I just recommended that they come back in a month’s time. This client had a 50-50 chance of acceptance, but if they wait a month, they’ll be more likely to get approval. Having that communication can be massive.

What if I’m a First Time Buyer and have bad credit? Will it affect me getting a mortgage?

No, it doesn’t. But there are a few key components to look at with bad credit if you haven’t got a mortgage currently. Firstly, what is the bad credit?

A very common example is where a buyer has been to uni, and they missed a phone bill because they forgot to update their mobile provider about their new address. We frequently see defaults for that. These people might now be doctors and nurses and have really well-paid jobs. That’s absolutely fine.

We’ve touched on credit score and credit searching already, but if your score is really low, we can look at a lender that will credit search rather than credit score. Let’s get your credit report, work through it if we need to and decide who will offer you a mortgage as a First Time Buyer.

Do I need a larger deposit for a mortgage with bad credit?

Sometimes. Everybody’s circumstances are different and our advice is always tailored to the individual.

Here’s an example of a case that I did last week. They had 10 CCJs and four defaults, all over three years old, not satisfied. That client could get a 5% deposit mortgage. There’s no limit on the value of the CCJs or defaults, and they didn’t need to be satisfied.

There are some really niche pieces of criteria with certain lenders, and we’ve had great success with 5% deposit deals.

Post-bankruptcy clients tend to need a 30% deposit depending on the timing. It is dependent on circumstances. But if you’ve been discharged from bankruptcy for over three years, one lender will accept a 3% deposit [information correct at the time of recording in July 2025].

The market is changing so quickly, so sit down with a broker. After a bankruptcy, a mortgage might be the least important thing on your mind, but it’s always worth sitting down with a broker and explaining that in two or three years’ time you plan to look for a mortgage.

You might not have bank accounts or anything at this point, but there will be things you can do to start boosting that score and getting back into a good position.