Introduction: Can You Get A Mortgage With Bad Credit In 2026?
This guide is for UK homebuyers, property investors, and self-employed individuals who have experienced credit issues and are seeking mortgage options in 2026. Understanding your options is crucial, as the right lender and strategy can make homeownership possible even after credit setbacks.
Yes, obtaining a mortgage with bad credit remains achievable in 2026. Despite many UK high street banks tightening their lending criteria following the rate rises of 2023-2024, specialist bad credit lenders for mortgages continue to lend to borrowers declined elsewhere. This reflects a significant opportunity for those with adverse credit histories.
We are Fox Davidson, award-winning UK mortgage brokers specialising in complex and adverse credit cases. Our team has built a proven track record helping clients who assumed homeownership was no longer an option. The current market environment, with the Bank of England base rate at 3.75% as of early 2026 and ongoing cost-of-living pressures affecting household budgets, has made mainstream credit scoring more stringent. However, this does not close the door to mortgage approval.
Bad credit mortgages, also known as adverse credit mortgages, subprime mortgages, or impaired credit mortgages, are conventional mortgages offered by specialist lenders who assess risk differently than mainstream banks. We collaborate with lenders who genuinely consider missed payments, defaults, County Court Judgments (CCJs), Individual Voluntary Arrangements (IVAs), debt management plans, and even past bankruptcy. Specialist lenders can assist clients with a bad credit history to secure a mortgage even after high street bank refusals. For our more complex or commercial borrowing clients, our minimum loan size typically starts at £250,000.
It is important to note that securing a mortgage with bad credit in the UK generally requires engaging with specialist lenders focused on applicants with financial difficulties and poor credit scores.
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Key Points Summary
- Mortgages with bad credit are accessible in 2026 through specialist lenders despite tighter high street criteria.
- Adverse credit markers include late payments, defaults, CCJs, IVAs, debt management plans, bankruptcy, and repossession.
- Specialist lenders assess applications on a case-by-case basis using manual underwriting, often requiring larger deposits and higher interest rates.
- Typical deposit requirements range from 5-10% for minor historic issues to 25-35%+ for recent or severe credit problems.
- Monthly repayments on bad credit mortgages are higher due to increased interest rates, impacting long-term affordability.
- Different lender types include high street banks (limited for bad credit), building societies (more flexible), and specialist adverse credit lenders (most accommodating).
- Self-employed and contractors with bad credit can access tailored mortgage solutions through specialist lenders who consider complex income.
- Working with an adverse credit mortgage broker improves chances of approval by matching applicants to suitable lenders and managing application strategy.
- Improving credit profiles before applying can enhance mortgage options and reduce costs.
- Bridging and commercial finance options are available for those with bad credit under specific conditions.
What Counts As “Bad Credit” For UK Mortgage Lenders?
The term “bad credit” refers to how lenders interpret your credit file based on your financial history; it is not a moral judgement. Each lender in 2026 applies different criteria when assessing credit risk, which underscores the importance of working with a specialist adverse credit mortgage broker who understands these nuances.
Common Adverse Credit Markers
These are typical credit issues that lenders consider adverse and which may affect mortgage eligibility:
- Late payments on credit cards, loans, or mortgages within the last 12-24 months.
- Credit card arrears or persistent minimum-payment patterns.
- Loan defaults (secured or unsecured).
- County Court Judgments (CCJs).
- Individual Voluntary Arrangements (IVAs).
- Debt management plans (DMPs).
- Bankruptcy (discharged or undischarged).
- Property repossession.
- Payday loan usage.
- Persistent overdraft use beyond agreed limits.
Key Factors Lenders Consider
Lenders evaluate adverse credit markers based on several critical dimensions:
- Recency: How recently did the issue occur? More recent problems pose higher risk.
- Severity: The size and nature of the sums involved impact risk assessment.
- Satisfaction: Whether the debts are settled or still outstanding influences lender decisions.
- Stability: A clear period of clean credit history following adverse events is favourable.
Frequent missed payments or multiple recent credit applications may increase perceived risk. However, being declined for a mobile phone contract or store card does not necessarily indicate a low credit score that disqualifies you from mortgage consideration, as such declines may relate to affordability or internal policies unrelated to overall credit rating.
Before engaging with us, we recommend downloading your full statutory credit reports from all three main UK credit reference agencies: Experian, Equifax, and Clearscore. This allows us to see precisely what mortgage lenders will review during your application.
How Bad Credit Mortgages Work In Practice
Understanding your credit profile is the first step to securing a bad credit mortgage. These mortgages function similarly to standard mortgages but typically involve higher interest rates, lower borrowing limits, and stricter underwriting.
Interest Rates and Fees
Bad credit mortgages share the core structure of standard repayment mortgages: you borrow a sum, agree on a term, and repay monthly with interest. The differences in 2026 primarily concern:
- Elevated interest rates compared to mainstream products.
- Lower maximum loan-to-value (LTV) ratios, often between 60-80%, rather than the 90-95% common in prime lending.
- Tighter affordability checks and stress testing.
- Greater reliance on manual underwriting instead of automated credit scoring.
- Higher product and arrangement fees.
Many specialist lenders require applications to be submitted via brokers with in-depth knowledge of their lending criteria. Direct applications are often not accepted for cases involving CCJs, IVAs, recent defaults, or complex income.
Deposit Requirements
Deposit size expectations vary significantly depending on the credit profile:
Credit Profile | Typical LTV Range | Indicative Rate Band (2026) |
|---|---|---|
Clean or minor historic credit issues | 90-95% | 4.5% – 5.5% |
Mild adverse (historic, satisfied issues) | 75-85% | 5.5% – 6.5% |
Heavy adverse (recent CCJs, IVAs, bankruptcy) | 60-75% | 6.5% – 8.5%+ |
The above figures are illustrative and depend on individual lender policies and case specifics.
- Clean or minor historic credit issues may allow deposits as low as 5-10%.
- Recent defaults or CCJs often require 20-30% deposits.
- Discharged bankruptcy or repossession cases may require deposits of 25-35% or more.
Monthly Payment Examples
Higher interest rates compound over typical 25-30 year mortgage terms, increasing monthly repayments substantially. Balancing immediate acceptance with long-term affordability is essential. Sometimes accepting a higher rate initially to secure homeownership is the best strategy, with plans to remortgage later.
Examples of monthly repayments on capital repayment mortgages:
£300,000 mortgage over 25 years:
- 5% interest: approx. £1,753/month
- 6% interest: approx. £1,933/month
- 7% interest: approx. £2,120/month
£500,000 mortgage over 25 years:
- 5% interest: approx. £2,922/month
- 6% interest: approx. £3,222/month
- 7% interest: approx. £3,533/month
Loan Amount | Interest Rate | Term | Approximate Monthly Payment |
|---|---|---|---|
£300,000 | 5.5% | 25 years | £1,842 |
£300,000 | 6.5% | 25 years | £2,026 |
£500,000 | 5.5% | 25 years | £3,070 |
£500,000 | 6.5% | 25 years | £3,377 |
These figures are for illustration only and do not represent actual offers.
Most bad credit mortgages arranged for residential borrowers are capital repayment. Property investors may use interest-only mortgages to maintain healthier monthly cash flow, repaying the principal through eventual sale or refinancing.
We use detailed sourcing systems and direct lender calculators tailored to each case before submitting applications to ensure accuracy.
Types Of Bad Credit Lenders We Use (And When We Use Them)
We work with three main categories of lenders in 2026: high street banks, building societies, and specialist adverse credit lenders. Each has distinct lending criteria and suitability depending on the applicant’s credit profile.
High Street Banks
High street banks generally are unsuitable for applicants with recent or heavy adverse credit. They may consider older, minor credit blips when supported by strong income and a larger deposit. For clients with historic and fully satisfied credit issues, we test high street options first due to their typically lower rates.
Building Societies
Regional building societies often offer more flexibility, especially when manual underwriting and strong personal narratives are permitted. They may cap LTV ratios or require face-to-face legal work with their solicitors but tend to take a more human view of financial history than automated high street systems.
Specialist Bad Credit Lenders
Specialist lenders focus on adverse credit and complex income situations. Their underwriters conduct in-depth manual reviews of credit files rather than relying solely on automated credit scores. Many specialise in specific credit scenarios and accept cases only via brokers with detailed knowledge of their criteria.
Typical specialist lender profiles include:
- Lenders accepting active or completed debt management plans.
- Lenders willing to consider recent CCJs if satisfied.
- Lenders experienced with discharged bankruptcies (usually 3+ years post-discharge).
- Lenders specialising in self-employed or contractor income.
We do not list all lenders here as criteria frequently change, but this overview demonstrates the market landscape.
Specialist Lenders For Specific Adverse Credit Issues
Different types of adverse credit require tailored lender approaches. Below is a summary of how we match lenders to credit scenarios:
- Missed mortgage payments: Most lenders require 12+ months clear of arrears; lenders experienced with mortgage arrears are preferred.
- Unsecured defaults: Some lenders ignore small, historic defaults (3-6 years old) or telecom defaults if the rest of the file is clean.
- Debt management plans: A limited number of lenders accept active DMPs, usually at lower LTVs and higher rates; we evaluate the borrower’s best interests.
- IVAs: Lenders typically want to see completion or near-completion and stable finances since.
- Bankruptcy: Usually requires 3-6 years post-discharge, full clearance, and strong income and deposit.
- Past repossession: The most challenging; lenders usually require 6+ years since event plus significant compensating factors.
This high-level overview illustrates our understanding of the market without guaranteeing specific deals.
Common Bad Credit Scenarios We Help With
Credit issues such as CCJs, defaults, and missed payments remain on credit files for six years, influencing lender decisions.
Missed Unsecured Payments (Credit Cards, Personal Loans)
- Occasional late payments over 18 months ago may be considered minor by many lenders.
- Patterns of frequent late payments across multiple accounts are more concerning but can be managed with the right lender.
- Defaults on unsecured credit depend on age, value, and whether they are satisfied.
Defaults
- Defaults over 3 years old and satisfied may be ignored by some lenders.
- Recent or unsatisfied defaults reduce lender options but do not eliminate them.
- Multiple defaults typically require larger deposits and acceptance of higher interest rates.
County Court Judgments (CCJs)
- Single small CCJs over 3 years old and satisfied are often acceptable.
- Multiple or recent CCJs require specialist lenders at lower LTVs.
- CCJs remain on credit files for six years regardless of payment.
Debt Management Plans
- Completed DMPs with 12+ months since completion are considered by many specialist lenders.
- Active DMPs have limited options but are not impossible with the right lender.
IVAs and Bankruptcy
- Completed or nearly complete IVAs are considered by several specialist lenders.
- Bankruptcy generally requires 3-6 years post-discharge and evidence of financial rehabilitation.
Mortgage Arrears and Repossession
- Mortgage arrears in the last 6-12 months are treated seriously by most lenders.
- Past repossession usually requires 6+ years since the event and a substantial deposit.
Self-Employed and Contractor Income
- Mainstream lenders often struggle with complex income even without credit issues.
- Specialist lenders consider alternative income verification and assess applications on a case-by-case basis.
We build narratives explaining the reasons behind credit issues—such as illness, redundancy, divorce, or business failure—and demonstrate why these are unlikely to recur. This approach is key to success with specialist lenders.
From Declined To Accepted: How We Rebuild A Case
We assist clients declined by high street banks by rebuilding their mortgage applications strategically.
Our Step-by-Step Process
- Gather Full Details
- Obtain decline letters if available.
- Collect full credit files from all three credit bureaus.
- Gather income documentation and details of current commitments.
- Analyse the Decline
- Understand exactly why the previous lender declined.
- Pause and Profile Tidy-Up
- Settle small outstanding debts.
- Close unused credit accounts to simplify credit files.
- Build evidence of savings discipline over 2-3 months.
- Register on the electoral roll if not already done.
- Strategic Application
- Avoid multiple hard searches that damage credit scores.
- Apply to the right bad credit lender at the right time.
Case Stage | Before Our Involvement | After Our Work |
|---|---|---|
Lender approached | High street bank | Specialist adverse lender |
Outcome | Declined | Approved in principle |
Deposit required | N/A (declined) | 25% |
Rate band | N/A | 6.25% fixed 2 years |
Term | N/A | 25 years |
This example is illustrative.
We act as strategic mortgage advisers, not just application processors. Sometimes waiting improves chances; other times, immediate action is necessary.
📞 Call for immediate expert advice. 💻 Complete our enquiry form 📧 Email outline your requirements
Commercial, Buy-To-Let And Bridging Options With Bad Credit
We also provide finance options for property investors, landlords, and business owners with adverse credit.
Types of Finance We Arrange
- Commercial mortgages for trading premises.
- Limited company buy-to-let mortgages (including HMOs, MUFBs, and student accommodation).
- Development finance.
- Bridging finance from approximately £250,000 upwards.
Lenders in these sectors may be more flexible on personal credit if the property and deal fundamentals are strong. For investment properties, rental income or business income covering loan payments is often more important than personal credit history.
Key Lender Considerations
- Debt Service Coverage Ratio (DSCR): Rental income typically needs to be 125-145% of mortgage payments.
- Property type and condition: Standard properties are easier to finance; specialist assets require specialist lenders.
- Tenant quality and lease length: Strong tenants strengthen deals.
- Exit strategy: Lenders require a clear plan for loan repayment or refinancing.
- Personal financial history: Still relevant but weighed alongside deal strength.
Regulated bridging loans may assist homeowners with bad credit needing to downsize, break property chains, or fund renovations. A clear, realistic exit route is essential, typically through sale or refinancing.
Using Bridging Finance To Overcome Short-Term Adverse Credit Barriers
Bridging loans can provide solutions when mainstream lenders will not lend, such as auction purchases with tight deadlines or quick property refurbishments.
Typical bridging lender requirements for bad credit borrowers include:
- Strong security, usually first charge over property with clear title.
- Professional valuation confirming property value.
- Believable and documented exit strategy.
- Up-to-date accounts if loan is business-backed.
- Deposit or equity stake typically 25-40% or more.
Bridging Case Example | Details |
|---|---|
Purchase price | £400,000 |
Loan amount | £280,000 (70% LTV) |
Term | 12 months |
Rate band | 0.85% per month |
Arrangement fee | 2% |
Exit route | Sale of existing property within 9 months |
This example is illustrative and not an offer of finance.
We always explore refinance and longer-term mortgage options before recommending bridging loans to avoid clients being stranded at term end.
Contractors And Self-Employed: Securing Mortgages With Bad Credit
Self-employed and contractor applicants face additional scrutiny due to complex income profiles, especially with adverse credit histories. High street lenders often decline such applications.
Specialist bad credit mortgage lenders and adverse credit mortgage brokers understand these challenges and assess applications on a case-by-case basis, considering full financial circumstances rather than automated credit scores alone.
How We Help Self-Employed and Contractor Clients
- Tailored lender selection: We work with lenders specialising in self-employed and contractor cases, many of whom accept adverse credit histories.
- Manual underwriting: Specialist lenders often accept alternative income verification, including recent contracts, retained profits, or multiple income streams.
- Flexible documentation: While two to three years of accounts or SA302s are typical, some lenders accept one year’s figures if supported by strong payment history.
- Building your case: We help present income and credit history positively, including explanations for missed or late payments and financial difficulties.
- Deposit and product options: Larger deposits (15-25%) and higher interest rates are common, but options remain available.
Working with an adverse credit mortgage broker knowledgeable in self-employment and bad credit criteria maximises approval chances.
How We As Bad Credit Mortgage Brokers Improve Your Chances
Our expertise as bad credit mortgage brokers significantly improves your likelihood of mortgage approval by guiding you through the application process and aligning your case with suitable lenders.
Our Mortgage Process for Adverse Credit Clients
- In-depth fact-find: We collect comprehensive details about your income, outgoings, credit issues, and property goals.
- Full credit file review: We analyse your reports from Experian, Equifax, and TransUnion.
- Income and expenditure analysis: We calculate genuine affordability using lender-specific methods.
- Manual lender matching: We identify lenders whose criteria fit your individual circumstances.
- Pre-application testing: Where possible, we run soft searches and pre-underwriting checks to minimise hard credit search impacts.
We have access to mortgage products and deals unavailable directly to the public. Our specialist knowledge and lender relationships in adverse credit and complex income markets enable us to find tailored mortgage solutions others may miss.
Soft credit checks and pre-underwriting assessments protect your credit file from damage caused by multiple hard searches.
We offer initial free, no-obligation consultations to explain your options before commitment.
What We Need From You To Build A Strong Application
To prepare a strong mortgage application with specialist lenders, we typically require:
- Last 3-6 months of bank statements from all accounts.
- Payslips (last 3 months) or full accounts if self-employed (2-3 years).
- SA302 tax calculations and tax year overviews.
- Proof of deposit source and savings.
- Details of all credit commitments (loans, cards, hire purchase).
- Full credit reports from Experian, Equifax, and TransUnion.
Providing context for credit issues enhances application strength:
- Letters confirming redundancy from previous employers.
- Medical documentation explaining health-related financial difficulties.
- Solicitor correspondence regarding divorce or separation.
- Evidence of business circumstances causing personal credit issues.
Absolute honesty is essential; undisclosed CCJs or defaults increase decline risk when uncovered by lender checks. We may recommend staging applications to maximise lender options, such as waiting for a DMP to complete or settling small CCJs.
Steps To Improve Your Credit Before And After Getting A Mortgage
Improving your credit profile before and after mortgage approval can enhance options and reduce costs.
Before Applying
Some clients can wait 6-12 months to improve credit profiles; others require immediate finance. We support both approaches while aiming for long-term benefits.
Key actions include:
- Checking all three credit files for errors, such as incorrect addresses, debts not yours, or closed accounts still marked open.
- Correcting inaccuracies by disputing with credit reference agencies.
- Setting up direct debits for all credit commitments to ensure timely payments.
- Reducing credit card utilisation below 30-40%.
- Avoiding new credit applications before mortgage application.
- Staying within agreed overdraft limits.
- Registering on the electoral roll at your current address.
Consistent on-time payments for 12-24 months carry significant weight with many lenders in 2026. Paired with stable employment and residency, this rehabilitation can open previously closed doors.
If struggling with debt, seek free independent debt advice before borrowing. We do not recommend mortgages that worsen unsustainable financial situations.
After Securing a Mortgage
Post-approval, we plan for remortgaging to cheaper products once adverse credit ages beyond lender look-back periods (typically 3-6 years), LTV reduces through payments and property appreciation, and payment conduct is strong.
Understanding How Interest Rate Changes Affect You
The Bank of England base rate at 4.25% in 2026 influences tracker and variable-rate mortgages. Fixed-rate pricing reflects market expectations of future rate movements rather than current base rate alone.
For adverse credit borrowers, specialist lenders price in individual risk profiles and funding costs. Rate cuts may not fully or quickly pass through to bad credit borrowers compared to prime borrowers.
Base Rate Scenario | Sample Bad Credit Mortgage Rate | Monthly Payment (£350,000, 25yr) |
|---|---|---|
Base rate at 4.00% | 6.00% | £2,253 |
Base rate at 3.50% | 5.75% | £2,203 |
Base rate at 3.00% | 5.50% | £2,153 |
Illustrative only; actual movements depend on lender and product.
We monitor the market continuously and assist clients in moving from expensive bad credit products to mainstream deals as credit profiles improve.
📞 Call for immediate expert advice. 💻 Complete our enquiry form 📧 Email outline your requirements
Frequently Asked Questions About Bad Credit Lenders For Mortgages (UK, 2026)
Yes, but options are limited. Mild adverse credit that is historic and satisfied may allow deposits of 10-15% with certain specialist lenders. More serious issues like recent CCJs, IVAs, or bankruptcy typically require deposits of 20-30% or more. Each case is assessed individually.
Timeframes vary by severity. Minor late payments or small defaults may be overlooked after 1-2 years if satisfied. CCJs usually need to be 2-3+ years old with clean credit since. Bankruptcy typically requires 3-6 years post-discharge with financial rehabilitation. Each case is considered on a case-by-case basis.
Most lenders perform an initial soft check that does not affect your credit score, followed by a full hard search when you formally apply. We prioritise lenders allowing soft searches during sourcing to minimise credit file impact.
With the Bank of England base rate at 3.75%, cautious optimism exists for gradual reductions later in the year. However, individual rates depend on risk profile, LTV, and lender funding costs. Rate reductions for bad credit borrowers tend to be smaller than for prime borrowers.
Yes. Once adverse credit ages beyond lender look-back windows (often 3-6 years), LTV reduces, and payment history improves, you may qualify for mainstream products with lower rates.
Not necessarily. Full debt clearance is not always optimal. Sometimes using funds for a larger deposit improves mortgage options more than paying off small, old debts. We advise on the best approach based on lender criteria.
Yes. Specialist lenders focusing on landlord and limited company structures may accept historic credit issues if rental income and property fundamentals are strong.
We charge transparent broker fees. Many of the best bad credit lenders only accept applications via brokers. Accessing better-matched lenders, avoiding declines, and securing competitive rates often outweighs broker fees. Some lenders pay us procurement fees, which we disclose.
Next Steps: Speak To Us About Bad Credit Mortgage Options
Bad credit does not close the door to mortgage approval but changes lender approaches, loan structures, and remortgage planning. The right lender and structure can make homeownership or property investment possible even after high street bank refusals.
As award-winning UK mortgage brokers, we specialise in complex residential, buy-to-let, commercial, and bridging finance from £250,000 upwards across England, Wales, and the wider UK. Our in-depth knowledge and lender relationships enable us to navigate challenging credit histories.
We invite you to contact us for a free, no-obligation consultation. We will review your credit files, understand your goals and timelines, and provide honest advice on what is achievable. There is no pressure or commitment, just clarity.
Ready to discuss your options?
📞 Call for immediate expert advice. 💻 Complete our enquiry form 📧 Email outline your requirements
We work remotely via phone, video call, and email, so location is not a barrier. Early specialist mortgage advice, ideally before making an offer, leads to better outcomes than seeking help after mortgage declines.
Our role is to translate complex credit histories into clear, understandable narratives that the right lender can support. Whatever your circumstances, we are here to help you find a way forward.
