Key Facts
- Primary keyword: bad credit mortgage - 720 monthly searches
- Independent editorial guide - no affiliate links, no commission
- Sources: FCA, gov.uk, HMRC, Money and Pensions Service
- Last reviewed June 2026
What Is a Bad Credit Mortgage?
A bad credit mortgage is a mortgage available to borrowers with adverse credit history - a record of missed payments, defaults, county court judgements (CCJs), debt management plans, individual voluntary arrangements (IVAs), or previous bankruptcy. A bad credit mortgage is not a specific product type but rather a mortgage offered by lenders whose criteria accommodate borrowers mainstream lenders would decline.
Most mainstream high street lenders - Halifax, NatWest, Barclays, HSBC, Nationwide - have strict credit criteria and automatically decline applications from borrowers with recent adverse credit history. Bad credit mortgage lending is dominated by specialist lenders including Pepper Money, Kensington, Bluestone, and Together who have underwriting frameworks designed for adverse credit cases.
The definition of bad credit varies between bad credit mortgage lenders. Some accept minor adverse credit such as one or two missed payments in the past three years. Others accept more significant adverse history including satisfied defaults, CCJs, and completed IVAs. The key variables are the type of adverse event, its severity, how recent it was, and whether it has been satisfied.
Types of Adverse Credit and How They Affect Mortgages
Missed payments are the most common form of adverse credit. A single missed payment on a credit card two years ago is treated very differently from multiple missed mortgage payments six months ago. Bad credit mortgage lenders assess the pattern of missed payments, the total amounts involved, and whether the underlying account is now up to date.
Defaults are recorded when a creditor gives up chasing a debt and formally closes the account. A satisfied default (where the debt was subsequently repaid) is viewed more favourably than an unsatisfied default in a bad credit mortgage assessment. Most bad credit mortgage lenders require defaults to be at least one to two years old before they will consider an application.
County court judgements are court orders requiring a debt to be repaid. A CCJ that has been satisfied (paid) is treated more leniently than an outstanding CCJ in a bad credit mortgage application. Most specialist bad credit mortgage lenders require CCJs to be satisfied and at least 12 to 24 months old. A CCJ within the last year significantly limits options even in the bad credit mortgage market.
Bad Credit Mortgage Rates and Costs
Bad credit mortgage rates are higher than standard residential mortgage rates, reflecting the additional risk the lender accepts. The rate premium depends on the severity of the adverse credit history - minor adverse credit attracts a modest premium while significant adverse history commands a substantially higher rate.
As a broad guide, a borrower with a satisfied default over two years old might access a bad credit mortgage rate 1 to 2 percentage points above the best mainstream rates. A borrower with recent multiple defaults or an unsatisfied CCJ might face rates 3 to 5 percentage points above mainstream products, if they can access a bad credit mortgage at all.
Arrangement fees on bad credit mortgages are typically higher than standard products - often 1 to 2 percent of the loan amount. Broker fees are also common on bad credit mortgage applications, as specialist brokers invest significant time in identifying suitable lenders and presenting the case effectively. The total additional cost of a bad credit mortgage over a five-year period can be substantial and should be factored into any affordability calculation.
How to Improve Your Chances of Getting a Bad Credit Mortgage
The most effective steps to improve bad credit mortgage eligibility are: allowing time to pass between adverse credit events and the application; satisfying any outstanding defaults or CCJs before applying; registering on the electoral roll; and reducing overall debt levels relative to credit limits.
A larger deposit materially improves bad credit mortgage eligibility. At 85 percent LTV, the pool of bad credit mortgage lenders willing to consider an application is much smaller than at 75 percent or below. Saving a deposit of 25 to 30 percent before applying for a bad credit mortgage opens up significantly more options and better rates.
Obtaining a copy of the credit file from all three main UK credit reference agencies - Experian, Equifax, and TransUnion - before applying for a bad credit mortgage enables any errors to be identified and disputed. Incorrect adverse entries significantly harm eligibility and can often be corrected before a bad credit mortgage application is submitted.
Bad Credit Mortgage Brokers
A specialist bad credit mortgage broker is almost essential for adverse credit applications. Mainstream mortgage brokers may not have access to the specialist lender panel needed for bad credit mortgage cases, and submitting applications to unsuitable lenders results in hard credit searches that further damage the credit file.
Specialist bad credit mortgage brokers know which lenders accept which types of adverse history and can match the application to the most appropriate lender before any credit search is conducted. This targeted approach avoids the damage of multiple failed applications and maximises the probability of approval on the first attempt.
Bad credit mortgage brokers typically charge a fee for their services, reflecting the additional work involved. Fee structures vary - some charge a flat fee, others a percentage of the loan. The broker fee is usually worth paying because the alternative - searching the bad credit mortgage market without specialist knowledge - is both time-consuming and risky for the credit file.
Rebuilding Credit Before a Bad Credit Mortgage Application
Borrowers who are not urgently required to move can significantly improve their bad credit mortgage options by spending 12 to 24 months actively rebuilding their credit profile before applying. The most effective rebuilding strategies are consistent on-time payment of all current financial obligations, a credit builder credit card used for small purchases and repaid in full monthly, and reducing credit utilisation ratios below 30 percent.
Time is the most powerful factor in recovering from adverse credit. Most bad credit events fade from significance in mortgage underwriting after two to three years, and disappear from the credit file entirely after six years from the date of default or CCJ. A borrower who experienced financial difficulty in 2022 will face substantially fewer obstacles in a bad credit mortgage application in 2026 than they would have in 2023.
Keeping a record of all communications with creditors during a period of financial difficulty, and retaining evidence of any agreed repayment arrangements, provides useful documentation for a future bad credit mortgage application showing that the borrower engaged proactively with their creditors rather than ignoring obligations.
Disclaimer: This guide is for informational purposes only and does not constitute financial advice. Products, eligibility criteria and regulations change frequently. Consult an FCA-authorised adviser before making any decision. Kael Tripton Ltd is not authorised or regulated by the Financial Conduct Authority.
Frequently Asked Questions
Can I get a mortgage with bad credit in the UK?
Yes. Specialist bad credit mortgage lenders including Pepper Money, Kensington, and Bluestone offer mortgages to borrowers with adverse credit history including missed payments, defaults and CCJs. Rates are higher than mainstream products and a specialist broker is strongly recommended.
How long does bad credit affect a mortgage application?
Most adverse credit events remain on the credit file for six years from the date of default or CCJ. Their significance in bad credit mortgage underwriting typically reduces after two to three years. A satisfied default or CCJ over two years old is much less of an obstacle than a recent unsatisfied one.
What is the minimum deposit for a bad credit mortgage?
Most bad credit mortgage lenders require a minimum deposit of 15 to 25 percent. A larger deposit significantly improves eligibility and access to better rates in the bad credit mortgage market.
Will a bad credit mortgage affect my credit score further?
Applying for a bad credit mortgage involves a hard credit search, which temporarily reduces the score. Using a specialist broker who targets the application to appropriate lenders minimises unnecessary searches. Successfully managing a bad credit mortgage and making all payments on time gradually rebuilds the credit profile.
How do I find a bad credit mortgage broker?
Specialist bad credit mortgage brokers can be found through the Financial Services Register on the FCA website. A whole-of-market broker with demonstrated experience in adverse credit cases is preferable to a general mortgage broker who may not have access to the specialist lender panel required.
Sources
Last reviewed June 2026 · Kael Tripton Editorial
