Bad Credit Mortgages: What Lenders Accept and How to Get Approved

By Jake Stott, Knox Mortgages. Reviewed by an adviser authorised under Fort Advice Bureau, FCA FRN 972730. Published 27 September 2026. Last reviewed 27 September 2026.

A bad credit mortgage is a standard residential or buy-to-let mortgage arranged with a lender whose criteria accept past credit problems, such as missed payments, defaults, County Court Judgments (CCJs), a debt management plan, an IVA or a discharged bankruptcy. There is no special product called a “bad credit mortgage”. What changes is the lender, the deposit and the rate.

The short answer to “can I get a mortgage with bad credit?” is yes, in most cases. What decides it is not your credit score but three facts on your credit file: what the problem was, how long ago it was registered, and whether it has been settled. A single default from four years ago barely moves the needle. Two CCJs in the last year puts you with a specialist lender at 75% to 85% loan to value. This page sets out exactly how lenders treat each problem, which lenders are active in 2026 and what the extra cost looks like in pounds.

What counts as bad credit to a mortgage lender?

Bad credit, which lenders call adverse credit, means any record on your credit file that shows you did not repay credit as agreed. The main types are late or missed payments, defaults, CCJs, mortgage or rent arrears, debt management plans (DMPs), debt relief orders (DROs), individual voluntary arrangements (IVAs), bankruptcy, repossession and recent payday loans. Lenders treat these very differently. A missed mobile phone payment and a repossession are both “adverse”, but one is ignored by many lenders and the other can close most of the market for years.

Bad credit is not the same as thin credit. Someone who has never borrowed has a low score but no adverse, which is a different problem. Our guide to what credit score you need for a mortgage covers that side. Lenders use the raw data on your file, not the score in your credit app.

How do mortgage lenders view each type of bad credit?

Lenders judge each credit problem on its severity, its age and whether it has been settled. The table below is our summary of how the specialist and near-prime market treats each problem as of September 2026, based on the published criteria of the lenders named later on this page. The loan to value (LTV) and deposit figures are typical ranges when the problem is recent (within roughly 12 to 24 months). Older problems usually unlock higher LTVs.

What is the 6 year credit file rule?

Most negative records stay on your UK credit file for 6 years from the date they were registered, then drop off automatically. This applies to defaults, CCJs, missed payments, DMP markers, DROs, IVAs and bankruptcy. The clock runs from the date of the default or judgement, not the date you settled it, so paying off a default does not make it disappear sooner. It changes the marker to “satisfied”, which lenders prefer.

There are three details that catch people out. A CCJ paid in full within one month of the judgement is removed from the register entirely, so it will not show at all. An IVA stays on file for 6 years from the date it started, even if it completed earlier. Bankruptcy stays for 6 years from the date of the order. The practical rule for mortgages is that once your adverse is older than 6 years, the high street is back in play, because the lender can no longer see it. The exception is the application form: some lenders ask whether you have “ever” been bankrupt or had a CCJ. You must answer the question as written, even if the record has gone from your file.

How do specialist lenders tier adverse credit?

Specialist lenders sort applicants into credit tiers, then price each tier with its own rate and maximum LTV. The cleaner your recent history, the higher your tier, the lower your rate and the bigger the loan you can get. Bluestone Mortgages is a good example because it publishes its tiers in full. The table below is taken from its residential product guide dated July 2026. Where there are joint applicants, the tier is set by the applicant with the worse credit.

Bluestone also ignores CCJs and defaults under £500, and any telecoms or utility defaults, when setting the tier. It wants no new defaults or CCJs in the last 6 months, and it applies a 1.00% rate loading on its AA, A and BBB tiers for anyone who has had a bankruptcy, IVA or DRO discharged in the last 6 years. Other lenders use different names. Pepper Money tiers by months since the last CCJ or default, Vida uses Vida 6, Vida 24 and Vida 36, Aldermore uses Levels 1 to 5 and Kensington uses Select, Core, Resi 12 and Resi 6. The principle is identical.

How much more does a bad credit mortgage cost? A worked example

The cost of bad credit is the rate difference multiplied by the size and length of the loan. Here is a worked example using Bluestone’s published 5 year fixed rates at 75% LTV from its July 2026 product guide, set against an illustrative mainstream rate of 4.25% for a clean-credit borrower. The rates are real published rates at the time of writing; the mainstream figure is for comparison only and is not a quote.

The scenario: a £270,000 purchase with a £70,000 deposit, so a £200,000 mortgage at 74.1% LTV, repaid over 25 years (300 monthly payments). The monthly payment uses the standard repayment formula: payment = loan × r ÷ (1 minus (1 + r) to the power of minus 300), where r is the annual rate divided by 12.

Reading the arithmetic: moving from the BBB tier to Clear saves £1,418.67 minus £1,305.77 = £112.90 a month, which is £112.90 × 60 = £6,774 over the five year fix. The gap between BBB and the illustrative mainstream rate is £335.19 a month, or £20,111 over five years. Bluestone’s product fee on these rates is £1,495, which should be added to the comparison. Two conclusions follow. First, the tier matters, so if you are a few months from a default turning 36 months old, waiting can move you up a tier. Second, a shorter fix (2 or 3 years) on a bad credit mortgage is often the better plan, because your credit keeps ageing and you can remortgage to a cheaper tier sooner.

Which lenders offer bad credit mortgages in 2026?

The active adverse credit market in 2026 is a group of specialist and near-prime lenders, most of which only accept applications through brokers. The table below sets out each lender’s published position as of September 2026, with the source date. We quote criteria exactly where we have verified them on the lender’s own documents; where we have not, we say so.

Why should you check all three credit reference agencies?

You should check all three UK credit reference agencies, Experian, Equifax and TransUnion, because lenders do not all use the same one, and the three files often hold different information. A default can appear on one file and not another, and errors such as a wrong address, an account that is not yours or a settled debt still showing as open are common. If a lender searches the one file you have not checked, you find out about the problem when you are declined.

You are legally entitled to your statutory credit report free from each agency, and each also offers free online access to your report. For a mortgage, the detail matters more than the score: note every default and CCJ with its registration date, amount and whether it is satisfied; every missed payment in the last 24 months; any linked financial associates, such as an ex-partner you once had a joint account with; and your electoral roll status. If you find an error, raise a dispute with the agency directly before you apply. Once we have your three reports, we can match you to the right lender tier before a single search is run.

How much can I borrow with bad credit?

With bad credit you can usually borrow 4 to 4.5 times your income with a specialist lender, and some go higher. Bluestone publishes up to 5.5 times income in its July 2026 guide. The limit is set by affordability, not the adverse itself, but adverse affects affordability in two ways.

First, rates are higher, so the stress test at a higher rate reduces the amount the numbers support. Second, if you fall under the FCA definition of “credit impaired”, some lenders count every outstanding commitment in affordability whether or not you plan to repay it before completion. Aldermore states this in its July 2026 guide. That means a car finance agreement or a DMP payment can reduce your maximum loan by tens of thousands of pounds. The deposit also caps you: with a 15% deposit on a lender whose tier stops at 80% LTV, you either find more deposit or drop to a cheaper property. Affordability models differ widely between lenders on the same income, so it pays to compare several.

How can I improve my chances of getting a mortgage with bad credit?

The fastest way to improve your chances is to fix what you can control before you apply, and let time handle the rest. These steps carry the most weight with underwriters:

1. Get all three credit reports and correct errors. Remove wrong addresses, closed accounts showing as open and financial associates you are no longer linked to.
2. Settle defaults and CCJs where affordable. The record stays, but “satisfied” is treated better, and several lenders will not accept an unsatisfied CCJ.
3. Keep everything up to date from today. A fresh missed payment after old adverse is the single most damaging thing on a file, because it suggests the problem has not been fixed.
4. Register on the electoral roll at your current address.
5. Stop applying for credit. Each hard search in the months before a mortgage application is a small negative, and several look like credit hunger.
6. Stay clear of payday loans and overdraft limits. Many lenders read 12 months of bank statements.
7. Build your deposit. Every 5% of extra deposit moves you to a lower LTV band, which unlocks more lenders and lower rates.
8. Time the application. If a default or CCJ is about to pass the 24 or 36 month mark, waiting a few weeks can move you up a tier.

Our guide on how to improve your credit score for a mortgage goes through each step in detail.

Can I remortgage with bad credit?

Yes. You can remortgage with bad credit, and for many people it is the most useful product in this market. If your credit has worsened since you took your current deal, the first option is usually a product transfer with your existing lender, which normally involves no fresh credit check and no affordability test.

If you need to raise money or move lender, specialist lenders will remortgage with adverse on the same tiering as purchases. Pepper Money, for example, can consider capital raising on a remortgage to clear an active DMP, which replaces several unsecured payments with one secured one. That can make sense, but it turns unsecured debt into debt secured on your home, often over a much longer term, so the total interest paid can rise even as the monthly payment falls. We set that trade off out in pounds before recommending it. If a full remortgage is not possible, or would mean giving up a low fixed rate, a second charge loan can raise money on top of your existing mortgage instead.

Can I get a buy-to-let mortgage with bad credit?

Yes, but buy-to-let lenders are usually stricter on adverse than residential lenders, and the deposit is larger. Most want a 25% deposit as a minimum, and with adverse 25% to 35% is typical. The rental income must cover the mortgage at the lender’s stress rate, usually 125% to 145% of the payment.

Kensington’s July 2026 credit history sheet shows the pattern. Its BTL Prime range wants defaults and missed payments older than 36 months and CCJs older than 72 months. Its BTL Core range accepts defaults, missed payments and CCJs older than 24 months, and DMPs with a 12 month track record. Rely, the OSB Group brand that took over Precise’s buy-to-let lending, publishes Light Adverse and Light Adverse+ tiers for CCJs and defaults. Note that Kent Reliance stopped new buy-to-let lending in December 2025, so older guides naming it are out of date. Most buy-to-let lenders also want you to own your own home, which after serious adverse often means buying a residential property first. See our buy-to-let mortgage guide for the wider rules.

Why do bad credit mortgage applications get declined, and what is the fix?

Most bad credit declines are not a verdict on you. They are a mismatch between your file and the lender chosen. These are the reasons we see most often, and what fixes each one.

I have been declined for a mortgage before. What now?

If you have been declined, stop applying. The biggest mistake after a decline is to try another lender the same week, which adds a second hard search and often a second decline, and makes the next lender more cautious. A decline in principle usually leaves a hard or soft search on your file, but the decline itself is not recorded on your credit report.

Next, find out why. The lender will not always give the full reason, but it must tell you which credit reference agency it used. Get that report, then all three. In most declined cases we review, the cause is one of three things: the wrong lender for the age of the adverse, adverse that was not disclosed, or affordability. All three are fixable. Previously declined applicants are a core part of our work, and we check your file against each lender’s rules before any search.

A Knox case: two defaults, a satisfied CCJ and a high street decline

The following is an anonymised, illustrative case based on the type of client we see regularly. A first-time buyer couple in Greater Manchester came to us after a high street bank declined them in principle. Between them they had two defaults, both registered 30 months earlier (£640 and £1,150, one satisfied), and a CCJ for £900 registered 40 months earlier and since satisfied. They had a 15% deposit on a £230,000 flat and a combined income of £58,000.

The decline came from an automated score, not a manual underwriter. Looking at the published criteria, the defaults sat inside a 36 month window that pushed them below the cleanest tiers, but the numbers and values fitted mid-tier adverse ranges comfortably at 85% LTV. We also noticed that one default would pass 36 months within 6 weeks. We used those weeks to clean up all three credit files, then submitted to a lender whose rules the case met on day one. It was approved in principle first time, at a rate materially lower than the tier they would have been placed in six weeks earlier.

Can I get a bad credit mortgage on benefits or Universal Credit?

Yes, some lenders accept benefit income, and a smaller group accept it alongside adverse credit. Lenders usually want benefits to top up earned income rather than be the only income. Universal Credit is the most common case: because it adjusts to your earnings each month, lenders look at how stable it has been. Which benefits count, and at what percentage, varies widely by lender. See our guides to a mortgage on Universal Credit and a mortgage on benefits for the details.

Bad credit mortgage FAQs

Can I get a mortgage with really bad credit?

Often, yes. Specialist lenders accept multiple defaults and CCJs; Bluestone’s BBB tier allows 4 defaults and 3 CCJs in 36 months at up to 75% LTV. The limits are recent problems, most lenders want nothing new in the last 6 months, and undischarged bankruptcy, which no lender will accept.

Can I get a mortgage with a CCJ?

Yes. Many specialist lenders accept a CCJ once it is over 6 months old, and more once it is over 24 to 36 months old, especially if satisfied. Kensington accepts one CCJ up to £1,000 in the last 24 months on its Resi 6 and Resi 12 ranges. Expect a 10% to 25% deposit depending on age and value.

How big a deposit do I need for a bad credit mortgage?

Usually 10% to 25%. Minor or older adverse can work with 10%, and some lenders go to 90% or 95% LTV for small, old problems. Recent defaults, CCJs, active DMPs and insolvency within 3 years usually need 15% to 25%. Buy-to-let with adverse needs 25% to 35%.

Do bad credit mortgages have higher interest rates?

Yes, typically. On Bluestone’s July 2026 5 year fixes at 75% LTV, the rate runs from 6.14% on its cleanest tier to 7.04% on BBB. On a £200,000 loan over 25 years that is £112.90 a month more for BBB than Clear. Older, smaller adverse can attract rates close to mainstream.

How long does bad credit stay on my credit file?

Six years from the date it was registered. That covers defaults, CCJs, missed payments, DMP markers, DROs, IVAs and bankruptcy. Settling a debt does not shorten the 6 years, but it changes the marker to satisfied. A CCJ paid in full within one month of judgement is removed from the register.

Will a bad credit mortgage lender do a hard credit search?

Yes, at the full application stage, and many do so at the decision in principle stage too. That is why lender selection before any search matters: a mismatched application adds a hard search and possibly a decline. We check your credit reports against published criteria first, so searches are only run where the case fits.

Can I remortgage with bad credit?

Yes. A product transfer with your current lender usually needs no new credit check. To move lender or raise money, specialist lenders use the same tiers as for purchases. The key question is your payment history on your current mortgage, particularly any arrears in the last 12 months.

Is it worth waiting for my credit to improve before applying?

Sometimes. If a default or CCJ is weeks from passing a 24 or 36 month threshold, waiting can move you to a cheaper tier. If it is years away, buying now on a short fix and remortgaging as your credit ages is often better. The answer depends on your exact dates, which is why we check them first.

Talk to a broker who works in adverse credit every week

Bad credit mortgages are won or lost on lender selection. Knox Mortgages is whole-of-market, so we see the specialist lenders on this page and the high street, and we check your exact dates against each one’s live criteria before any search is run. If waiting a few weeks would get you a better tier, we will tell you. Book a free, no-obligation discovery call and we will map out your options.

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Your home may be repossessed if you don’t keep up repayments on your mortgage.

Knox Mortgages is a trading style of Fort Advice Bureau which is regulated and authorised by the FCA to conduct Mortgage and Protection business, FRN: 972730