Bad credit mortgages

A bad credit history doesn’t have to equal mortgage rejection. Bad credit mortgages are designed to help people with a poor credit rating buy a house or remortgage. We look at what they are, how to you get one and what you need to watch out for.

Angela Kerr Director, Editor

What are bad credit mortgages?

Bad credit mortgages are aimed at borrowers with a poor credit history and rating. Some lenders specialise in offering these mortgages although they typically have higher interest rates and fees. Bad credit mortgages may also require a bigger deposit than you would need for mainstream mortgages.

Bad credit mortgages are also known as adverse credit mortgages or sub-prime mortgages.

Can you get a mortgage for bad credit?

Having bad credit doesn’t mean you can’t get a mortgage. But it’s important to get expert mortgage advice first to make sure you apply to the right lender. If your credit issues are fairly minor and happened a few years ago, a mainstream lender may lend to you. But if your situation is more complex, you may need to go to a specialist bad credit mortgages lender.

Using the right specialist mortgage broker is crucial. Our partners at Chartwell Funding will check whether a High Street lender is the best option for you first. Whereas some specialist mortgage brokers will only look at impaired credit lenders – this could mean you have to pay a higher mortgage rate.

If you have already applied for a mortgage and been rejected, stop. Numerous failed mortgage applications will damage your already poor credit history and reduce your chances of ever being approved. So don’t take any further action until you’ve taken advice. 

Get independent advice, a no obligation quote and an instant decision with our specialist lending partners at Chartwell Funding. Call them on 01454 809 300 or submit an enquiry form to request a callback. 

Do I have bad credit?

You can find out if you have bad credit by requesting your credit reports from the three main credit referencing agencies: Experian, Equifax and TransUnion.

Factors that can harm your credit rating include if you have:

• A high amount of debt
• Missed payments
• Defaulted on payments
• Been recently declared insolvent (including bankruptcy, Debt Relief Order and an Individual Voluntary Agreement)
• Been served a County Court Judgement (CCJ)  

Whether or not you have bad credit matters when you apply for a mortgage because the lender will check your credit report to see if you are likely to be a reliable borrower. What’s contained in your credit reports will be a factor not just in whether your application will be accepted but also in how much you can borrow and the rate you’ll pay.

Applying for bad credit mortgages

When applying for bad credit mortgages, you’ll have to supply everything you would need to if you were making a standard mortgage application including:

• Details of your salary and any other income
• Details of outgoings, including childcare costs.
• Proof of ID and current address. Being on the electoral role helps.

Read our guide How to make a successful mortgage application to find out more. But with bad credit mortgages, the lender will also usually want to see more evidence of your finances. And the process of getting bad credit mortgages usually takes longer.

Can you get 95% bad credit mortgages?

It is possible to get 95% bad credit mortgages with a 5% deposit. But if you have a 10% deposit, the number of lenders offering these types of mortgages increases the criteria relaxes. Mark Searle from Chartwell Funding explains, ‘Lender’s products are based on a tiering system, where you can cascade up and down depending on the level of bad credit. The more recent and serious the credit issues the greater the deposit needed, and it will also result in higher mortgage rates being offered..’

To have the widest choice of bad credit mortgage lenders you’ll need a deposit of 25%-30%.

Get independent advice, a no obligation quote and an instant decision with our specialist lending partners at Chartwell Funding. Call them on 01454 809 300 or request a call. 

How to get a mortgage with bad credit – 5 ways to boost your chances

There are steps you can take to boost your chances of your mortgage with bad credit application being accepted. These are:

1. Make sure information in your credit reports is accurate and up to date. Contact the credit reference agency to correct any mistakes. And make sure you aren’t financially connected to anyone you shouldn’t be, such as an ex partner. Read our guide 11 Tips to improve your credit score for a mortgage.
2. Review your spending. Go through your finances and cut costs where you can. Try to keep your monthly outgoings consistent and aim to always have money leftover at the end of each month.
3. Save a bigger deposit: If you have a bad credit history you may need a bigger deposit in order to access bad credit mortgages. Read How to save for a deposit.
4. Can your family help you access bad credit mortgages? Could your parents or grandparents gift you some money to increase your deposit size or help in another way such as by taking out a guarantor mortgage, family offset mortgage, joint mortgage or joint borrower, sole proprietor mortgage with you? Find out more about all of these in our guide The Bank of Mum and Dad – How to help your child buy a home.
5. Sort your finances: However, if your finances are in poor shape, you may be advised to hold off from trying to buy now and to spend some time getting your finances in order and rebuilding your credit rating first.

How much do bad credit mortgage broker fees cost?

Bad credit mortgage broker fees vary hugely. Our partners at Chartwell Funding charge a £299 fee for impaired credit mortgages, only paid when you get a formal mortgage offer. But some bad credit mortgages brokers charge thousands of pounds. So make sure you don’t pay more than you need to.

Plus, unlike some other bad credit mortgage brokers, Chartwell Funding will always look at mainstream lenders first, which could save you even more money. And if you do need to opt for a specialist lender, Chartwell Funding will build a plan to get you back with a High Street lender and repair your credit over time.

Should I apply for a mortgage with bad credit?

To decide whether or not you should apply for a bad credit mortgage, you’ll need to weigh up the pros and cons. One advantage of applying for a bad credit mortgage means you’ll be able to buy a property now rather than a few years down the line. Hopefully during that time you will build up a chunk of equity in your home.

But on the downside, bad credit mortgages may need a bigger deposit and you might not be able to borrow as much as you would if you didn’t have credit issues. Plus, the rates and fees with bad credit mortgages are usually higher.

To help you decide whether now is the right time, speak to a specialist broker like our partners at Chartwell Funding. They’ll advise you on which lenders are most likely to approve someone in your circumstances and can help you find and arrange a mortgage.

How can I improve my credit rating?

There are a number of ways you can improve your credit score including:

1. Register to vote
2. Pay all your bills on time
3. Reduce your debt
4. Get a credit card and pay off the balance regularly

Find out more with our guide: How to improve your credit rating before getting a mortgage.

First time buyer mortgages with bad credit

Getting a mortgage with bad credit if you’re a first time buyer is possible but you may need to use a specialist bad credit mortgages lender. You may need a bigger deposit compared to if you have a perfect credit history. Get tips on how to boost your deposit in our guide How to save for a deposit. Read our guide on Mortgage advice for first time buyers.

Can I remortgage with bad credit?

Remortgaging with bad credit is possible, although just like if you are getting a mortgage with bad credit, when you remortgage with bad credit, you may need to go with a specialist lender.

So speak to a specialist mortgage broker like our partners Chartwell Funding. They’ll consider mainstream lenders first to see if that’s best for you.

Bad credit mortgage rates

Bad credit mortgage rates are usually higher than the best mortgage rates on the market and you may need to pay higher fees too. But the easiest way to find out how much you are likely to pay with bad credit mortgages is to speak to a specialist mortgage broker. They’ll explain the bad credit mortgage rates on the market that you may get access to.

Can I get a mortgage if I’ve been made bankrupt

If you’ve been made bankrupt, there are typically lots of mortgage options once you have been discharged for 3 years (assuming everything else is clear). However, if you have a 30% deposit you can look for a mortgage after 12 months and if you have 25% deposit after 2 years. A High Street lender may consider you after three years but many have a flat rule of 6 years since discharge. It’s the same rules for repossessions.

So if you’ve been made bankrupt and are looking for a mortgaging, speak to a specialist broker like Chartwell Funding.

Get independent advice, a no obligation quote and an instant decision with our specialist lending partners at Chartwell Funding. Call them on 01454 809 300 or request a call. 

What’s the difference between bad credit history and no credit history?

A bad credit history means you’ve had issues in the past that have damaged your credit score, such as missed payments, having a large amount of debt, or even bankruptcy. Whereas no credit history means you haven’t built up a credit rating yet: if you’ve never had credit you don’t have proof that you were responsible borrower.

Can I apply for a joint mortgage if my partner has bad credit

When you make a joint mortgage application, the credit history of both borrowers will be taken into account. If your partner has bad credit, it’s a good idea to speak to a specialist broker for advice. Read more in our guide Buying a house with a partner: What to watch for.

Bad credit mortgage calculator

You’ll find bad credit mortgage calculators online but there are lots of variables with bad credit mortgages and a calculator won’t take these into account. To get up to date and accurate information that’s specific to your circumstances you should speak to a bad credit mortgage broker.

How to get a mortgage with bad credit but good income

Getting a mortgage with bad credit can be more difficult but having a good income should work in your favour, especially if that means you’ve been able to save a bigger deposit. Again, make sure to speak to a specialist mortgage broker as they’ll look at your situation and explain your options.

How common is adverse credit?

More than 15m people have a history of adverse credit in the UK, according to the 2023 Pepper Money Specialist Lending Study.

What’s the minimum credit score for a mortgage?

There isn’t a minimum credit score for a mortgage. But the higher your credit score the more likely your application will be accepted.

Bad credit mortgage brokers

Get independent advice, a no-obligation quote and an instant decision with our specialist lending partners at Chartwell Funding. Call them on 01454 809 300 or request a call. Plus, as they’re a specialist lender, they have access to some lenders that other brokers do not. They charge a £299 fee for impaired credit mortgages, only paid when you get a formal mortgage offer. But some bad credit mortgages brokers £1,000s. Plus, unlike some other bad credit mortgage brokers, they’ll always check mainstream lenders first.