Can You Get a Mortgage with Bad Credit?

You can get a mortgage with bad credit but the deals on offer may be limited and more expensive. Find out how bad credit mortgages work and whether it’s worth applying for one.

Rebecca Goodman, Brean Horne Last updated on 07 March 2022.
Can You Get a Mortgage with Bad Credit?

Lenders check your credit history when you apply for a mortgage before deciding how much to lend you, or whether to give you any money at all.

The best mortgage deals are usually reserved for borrowers with high credit scores because they have a good track record of managing debt.

Although having bad credit can limit your mortgage chances, it may still be possible to get a home loan.

Can you get a mortgage with bad credit?

It is possible to get a mortgage with bad credit, as some lenders offer home loans designed specifically for people with a poor credit history or no credit history at all. These are commonly known as bad credit mortgages, but are also referred to as adverse mortgages or subprime mortgages.

Bad credit mortgages work in a similar way to traditional mortgages, so you’ll need to make regular monthly repayments with fixed or variable interest added on top. However, there are some key differences to be aware of.

For example, lenders tend to charge higher interest for bad credit mortgages. This is because having a poor credit history can suggest to lenders that there is a higher risk that you won’t be able to pay off your loan.

Mortgage providers will also usually offer lower limits on how much you can borrow, and require a larger deposit too.

Most lenders will ask people with lower credit scores for a mortgage deposit of 20% to 25%, or more, of the property value compared to the 5% or 10% minimum usually required for a standard mortgage.

» MORE: How much should you put down for a mortgage deposit?

Can first-time buyers get a mortgage with bad credit?

You can get a first-time buyer mortgage with bad credit, but the deals available are limited and you may need to look for a specialist lender.

It can be much trickier to find a bad credit mortgage deal as a first-time buyer though. This is because mortgage terms and conditions are usually stricter since you haven’t previously owned property.

Using a mortgage broker could help you find specialist lenders. A broker will use your details and financial circumstances to match you to the most suitable bad credit mortgage deals.

» MORE: Tips for first-time buyers

Can you remortgage with bad credit?

You can also remortgage your property if you have bad credit, but your options will likely be limited. Bad credit remortgage deals usually come with higher interest to cover the increased risk that you may not be able to pay off the loan.

There will also be strict criteria you need to meet to be accepted for a bad credit mortgage when remortgaging.

The policy will vary between lenders and individual mortgage deals.

How to get a mortgage with bad credit

Before applying for a bad credit mortgage, it is worth checking whether you could get a standard mortgage first. Check your credit score and use an online eligibility checker or a mortgage broker to see what types of deals are available to you.

The application process for a bad credit mortgage is the same as when you apply for a mortgage of any kind. A lender will require documents, such as a passport as proof of ID, and utility bills as proof of address. You will also need to provide payslips, bank statements and tax documents to prove your income.

» MORE: What is required when applying for a mortgage

What credit score do you need for a mortgage?

There isn’t a particular credit score that will guarantee you a mortgage. The criteria for mortgages vary between lenders so while you might be eligible for a deal with one provider, you might not tick all the boxes for another.

As a general rule though, your mortgage chances improve with a higher credit score because it suggests that you are good at managing money and repaying debt on time.

A lower credit score could harm your chances of getting a mortgage because it suggests that you won’t be able to pay off your loan, based on your borrowing history.

Taking steps to improve your credit score could boost your chances of getting a mortgage. A higher credit score could also give you access to mortgage deals with cheaper interest rates.

» MORE: What is a good credit score?

Image source: Getty Images

About the authors:

Rebecca Goodman is a freelance journalist who has spent the past 10 years working across personal finance publications. Regularly writing for The Guardian, The Sun, The Telegraph, and The Independent. Read more

Brean is a personal finance writer at NerdWallet. She covers a range of financial topics and has written for consumer titles including Which?, Moneywise and The Motley Fool. Read more

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