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Can you get a mortgage with bad credit?
Getting a bad credit mortgage is difficult but not impossible. Because lenders view you as a riskier borrower, you’ll typically pay higher interest rates and mortgage fees.
You might also need to put down a bigger deposit (possible 15% or more) than someone with an excellent credit score, which may reduce the total amount you can borrow overall.
Some lenders specialise in so-called bad credit mortgages, also known as adverse credit or sub-prime mortgages, which are designed for those with poor credit ratings.
There’s no hard and fast rule of what lenders consider bad credit, and there’s no single credit reference agency that all lenders use.
However, any adverse credit action over the past six years could affect your rating and ability to get a mortgage from a mainstream lender.
Why is it difficult to get a mortgage with bad credit?
When you apply for a mortgage, lenders check your credit history to see if you’ve borrowed responsibly and repaid on time. Since mortgages are long-term loans, your long-term credit behaviour matters.
If you’ve struggled with debt, you may be seen as a higher risk, making it harder to get approved.
Issues that can hurt your credit score include:
Missed or late payments
Going over your credit limit or overdraft
Mortgage arrears or repossessions
CCJs, bankruptcy, IVAs, or debt management plans
Joint accounts with someone who has poor credit
How do bad credit mortgages work?
Mortgages for those with bad credit work in the same way as regular mortgages but will usually have higher interest rates and fees.
The higher interest rates on a bad credit mortgage means it will cost you a lot more than a regular mortgage, at least initially.
However, if you take out a bad credit mortgage, providing you keep up with your monthly repayments, your credit score should start to improve over the next two to three years, and you may be able to remortgage to a better rate.
Although remember if you try to remortgage before the end of your initial deal, you'll likely have to pay an early repayment charge (ERC).
How is my credit assessed when applying for a mortgage?
When you apply for a mortgage, lenders will check your credit score to understand how well you manage your finances. Your credit score is compiled by several different credit reference agencies (CRAs), with the three main ones being Experian, Equifax and TransUnion.
Each agency will have its own unique method of calculating your credit score, which means your rating can vary across the three.
Experian – poor 561 to 720, very poor 0 to 560
Equifax – poor 0 to 438
TransUnion – poor 551 to 565, very poor 0 to 550
Lenders might work with all three credit reference agencies or with just one or two.
If you’re struggling to get accepted for a mortgage with a mainstream lender because of your credit rating, there are several specialist lenders who will be more willing to accept those with poor credit.
These include United Trust Bank, Kensington Mortgages and Atom Bank.
How to get a mortgage with bad credit
1. Sort your finances
Reduce any existing debts or loans.
Pay bills and credit repayments on time.
Cut back on spending where possible.
Keep monthly outgoings consistent.
Avoid taking out new credit before applying for a mortgage.
2. Check your credit record
Use a free online service to check your credit scores with all three credit reference agencies.
Look for any black marks like missed payments.
Dispute any mistakes with the credit reference agency.
Check for financial links to others (e.g. ex-partners).
Remove financial associations if joint accounts or mortgages are closed.
3. Rebuild your credit score
Register on the electoral roll.
Pay bills on time.
Stay at the same address for several years.
Maintain a regular income.
4. Save for a bigger deposit
The larger your deposit, the better the mortgage rates.
Poor credit may require a 15%+ deposit.
Aim for a 40% deposit to unlock the best rates.
5. Accept help from family
Family members can gift a deposit to boost your loan-to-value ratio.
The money must be a gift (not a loan).
A letter and bank statements may be required to confirm the gift.
6. Get a guarantor
A family member can act as a guarantor if you have poor credit.
They must be a homeowner and willing to cover your mortgage if needed.
Be cautious – their home could be at risk, and your finances will be linked.
Advantages and disadvantages of applying for a mortgage with a bad credit
Bad credit mortgage FAQs
How do I check my credit record?
You can check your credit history for free. This guide explains how credit records work and how to check them yourself.
Should I apply for a mortgage with bad credit?
Defaults stay on your credit file for six years, even if fully repaid, and lenders can see them when you apply for a mortgage. Some people choose to wait until defaults are removed before applying. If you don’t want to wait, be sure to weigh the pros and cons of applying with bad credit.
Will applying for a mortgage give me a bad credit rating?
All credit applications appear in your credit file. So, if you’re rejected, this can negatively affect your score, and being rejected by lots of lenders can significantly damage your rating.
For this reason, it’s best to only apply for deals you think you have a good chance of getting, and to space out your credit applications by three to six months.
A successful application can also change your score – this could be an improvement as you’ve got a mortgage or a temporary drop because you have more debt.
What are the best bad credit mortgage rates?
The best bad credit mortgage rate depends on your circumstances and the reasons behind your poor credit history. If you're concerned about your credit but want to apply for a mortgage, speaking to a specialised mortgage broker can help.
Can a mortgage improve my credit record?
Yes, if you keep up with the repayments every month, your credit record could improve.
When you’ve paid off a part of your mortgage, you may then be able to remortgage to a better deal.
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