Buy to Let Mortgages with Bad Credit: A Complete Guide for Adverse Credit Landlords
Buy to Let mortgages with bad credit can feel challenging but it’s far from impossible. In fact, there’s a growing market of lenders who specialise in Buy-to-Let mortgages for bad credit applicants, offering solutions for those with missed payments, defaults, CCJs, or even previous bankruptcies.
The process of securing a buy-to-let mortgage with a poor credit history is often referred to as an ‘adverse credit buy.’ Working with specialist brokers is crucial in these cases, as they can help you navigate lender criteria and find suitable financing options tailored to borrowers with adverse credit issues.
Whether you’re a first-time landlord or looking to expand your property portfolio despite credit issues, this guide will walk you through how bad credit buy-to-let mortgages work, how they differ from standard BTLs, who they’re suitable for, and where to find the most supportive lenders.
Introduction to Adverse Credit Landlords
Adverse credit landlords often encounter unique hurdles when trying to secure buy-to-let mortgages. A history of bad credit such as missed payments, defaults, or other credit issues can make it challenging to access competitive interest rates or even get approved by many mortgage lenders.
However, the market for buy to let mortgages has evolved, and there are now lenders who specialise in helping those with adverse credit. These mortgage lenders take a holistic view of your financial circumstances, considering not just your credit history but also your rental income, personal income, and the potential of your buy to let property.
By understanding the range of mortgage products available and working with the right lenders, landlords with a bad credit history can still achieve their property investment goals and grow their portfolios, even when traditional let mortgages seem out of reach.
Understanding Bad Credit
Bad credit can stem from a variety of financial setbacks, including missed payments on loans or credit cards, defaults, or even a county court judgement. A low credit score signals to lenders that you may be a higher risk, which can make it more difficult to secure buy to let mortgages.
However, having a bad credit history doesn’t mean you’re out of options. Many lenders now offer let mortgages specifically designed for those with credit issues, and mortgage brokers can help you navigate these choices.
By regularly checking your credit file, addressing any outstanding credit issues, and working to improve your credit score, you can increase your chances of approval. Over time, maintaining a clean credit record can also open the door to better mortgage deals and lower interest rates when you come to remortgage your buy to let property.
What Is a Bad Credit Buy-to-Let Mortgage?
A bad credit buy-to-let mortgage is specifically designed for individuals who want to purchase or remortgage a rental property but have a history of credit problems. These issues could include:
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Late payments or missed payments on loans or credit cards
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Debt management plan (DMP)
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Individual Voluntary Arrangement (IVA)
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Low or thin credit score
These are all examples of adverse credit events that can impact mortgage eligibility. The timing and severity of each credit issue will influence lender decisions.
While mainstream banks often decline such applicants, specialist lenders offer more flexible underwriting, focusing on your overall affordability, property rental yield, and recovery from previous credit issues.
How Does It Differ from a Standard Buy-to-Let Mortgage?
Although both mortgage types allow you to buy property to rent out, bad credit BTL mortgages differ in a few key areas:
Feature |
Standard Buy-to-Let |
Bad Credit Buy-to-Let |
---|---|---|
Credit Score Requirements |
Good to excellent |
Adverse credit accepted |
Lenders |
Mostly high street banks |
Mostly specialist lenders |
Interest Rates |
Lower |
Typically higher |
Deposit Requirements |
20–25% |
Often 25–40% |
Underwriting |
Credit score driven |
Manual, case-by-case assessment |
Bad credit BTL mortgages are generally more flexible with underwriting, but they may require a larger deposit and come with slightly higher interest rates to reflect the perceived risk.
Bad credit buy-to-let mortgages may offer both interest only and capital repayment options, and the choice of mortgage product can affect your monthly payments and overall costs.
Who Are These Mortgages Suitable For?
Bad credit buy-to-let mortgages are ideal for:
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First-time or experienced landlords with a poor credit history
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Applicants with recent financial issues, such as CCJs or defaults
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Self-employed individuals with irregular income patterns
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Landlords coming out of debt management plans
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People recovering from bankruptcy or IVAs
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Borrowers rejected by high street banks but with strong rental yields
In many cases, the property itself and its rental income potential will play a big role in the lender’s decision, especially if your credit issues are historic or already resolved.
Benefits of a Bad Credit Buy-to-Let Mortgage
While the rates might be slightly higher, there are several key advantages to these mortgages:
As your credit profile improves, you may gain access to more lenders and better mortgage deals.
1. Access to the Property Market Despite Adverse Credit
These products give you a route to build or maintain your property portfolio even if your credit file isn’t perfect.
Specialist lenders can often help you secure a mortgage even if you have adverse credit issues in your history.
2. Manual Underwriting for Complex Cases
Lenders assess applications individually rather than relying solely on automated credit scoring, offering more flexibility.
Manual underwriting enables lenders to make a more informed lending decision based on your unique circumstances.
3. Potential to Refinance in the Future
Once your credit improves, you may be able to remortgage onto a better rate with a mainstream lender in a few years.
4. Rental Income Focused Affordability
Lenders usually assess affordability based on the rental income of the property, which means you may still qualify even with limited personal income or self-employment history.
Can You Get a Buy-to-Let Mortgage with Bad Credit and No Deposit?
Most bad credit BTL lenders require a minimum deposit of 25%, though some may ask for up to 40% depending on your credit history. If you’re wondering how much deposit is needed for a bad credit buy-to-let mortgage, it’s usually between 15% and 25% of the property value, but lenders may require more if you have adverse credit or a larger portfolio.
The size of your deposit can also influence lender willingness and the interest rates offered. 100% buy-to-let mortgages are not typically available unless you use additional security, such as another property.
That said, if you have significant equity in an existing property, you may be able to raise funds through capital raising remortgages to fund your next buy-to-let deposit.
High Street Lenders That May Consider Minor Bad Credit
While many high street lenders are strict, a few may consider minor credit blips especially if they are older than 3 years and well explained.
Lender |
Max LTV |
Credit Tolerance |
---|---|---|
Halifax |
75% |
May accept older defaults/CCJs under £300 |
NatWest |
70% |
Clean record preferred but may allow historical missed payments |
Barclays |
75% |
Typically stricter, but flexible for high-income borrowers |
TSB |
70% |
Case-by-case for minor issues only |
Nationwide (TMW) |
75% |
Generally for clean credit, but may allow small settled issues over 3 years old |
Keep in mind that most lenders do not accept severe adverse credit, as most lenders have strict criteria regarding recent or significant credit events and may decline applications outright if your file includes these issues.
Specialist Lenders for Bad Credit Buy-to-Let Mortgages
Specialist lenders are more experienced in dealing with adverse credit scenarios. Many work exclusively through mortgage brokers, and offer case-by-case underwriting. These lenders base their lending decisions on a comprehensive review of your financial profile, property value, and rental income. Working with a broker can improve your chances of successful mortgage applications with specialist lenders.
Lender |
Max LTV |
Credit Criteria |
---|---|---|
Precise Mortgages |
80% |
Accepts CCJs, defaults, DMPs, missed payments |
Together Money |
70% |
Flexible on poor credit and income proof |
Aldermore |
75% |
Allows historic credit issues and portfolio landlords |
Kensington Mortgages |
75% |
Suitable for complex credit and self-employed |
Bluestone Mortgages |
75% |
Accepts recent adverse credit, including IVA and bankruptcy |
Vida Homeloans |
75% |
Tiered credit bands; higher flexibility with larger deposits |
These lenders are ideal if your case doesn’t meet the “vanilla” criteria of the high street. They assess your overall circumstances, property rental yield, and credit improvement.
Mortgage Arrears and Foreclosure
Falling behind on your mortgage payments can lead to mortgage arrears, and if the situation escalates, foreclosure may occur where the lender repossesses your property due to non-payment. Both mortgage arrears and foreclosure can have a significant negative impact on your credit history, making it more challenging to secure future mortgages.
However, not all is lost. Some specialist lenders are willing to consider applicants who have experienced mortgage arrears or even foreclosure, especially if you can demonstrate improved financial management since the adverse event.
These lenders will look at the reasons behind your payment difficulties and may offer flexible mortgage products designed to help you get back on track and rebuild your credit profile.
Tips for Improving Your Chances of Approval
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Work with a specialist broker – They know which lenders, including bad credit lenders, will consider your profile and how to package your case effectively.
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Be prepared for a credit check – Understand that lenders will assess your credit rating and history during the mortgage application. Knowing how your credit rating is evaluated can help you anticipate potential issues.
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Check your credit report – Review your credit report before applying, as lenders will conduct credit checks that reveal your credit history and score. Make sure everything is accurate and resolve any outstanding disputes or errors.
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Provide all the details – When completing your mortgage application, be honest and provide all the details about your financial situation and credit history. Full disclosure helps avoid unnecessary delays or rejections.
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Save a larger deposit – A higher deposit reduces the lender’s risk and can open up more competitive rates.
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Consider monthly payments – Think about how the monthly payments will impact your affordability and cash flow, especially if you are working with bad credit lenders who may charge higher rates.
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Demonstrate strong rental potential – If your chosen property has a high yield and stable demand, lenders will be more comfortable approving the mortgage.
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Explain the context – Lenders are more understanding if your bad credit is due to a one-off life event (illness, redundancy, divorce, etc.) and not ongoing mismanagement.
Common Mistakes to Avoid
When applying for a buy to let mortgage with bad credit, it’s important to avoid common pitfalls that could jeopardize your application. One major mistake is failing to disclose all credit issues lenders will uncover these during their checks, and lack of transparency can lead to automatic rejection.
Another error is applying to multiple lenders at once without proper guidance, which can negatively affect your credit score and reduce your chances of approval. It’s also crucial to consider the long-term financial implications of any mortgage with bad credit, including higher interest rates and fees.
Be wary of lender options that seem too good to be true, as excessively high rates or hidden charges can create further financial strain. By working with experienced mortgage brokers and carefully evaluating all lender options, you can avoid these mistakes and secure a let mortgage with bad credit that suits your needs.
Final Thoughts
A poor credit history doesn’t have to stop you from investing in property. While high street lenders may turn you away, specialist lenders offer realistic, flexible mortgage solutions tailored to landlords with less-than-perfect credit profiles. This applies to both buy-to-let and residential mortgages, and in both cases, seeking specialist advice is crucial for applicants with bad credit.
Whether you’ve had late payments, CCJs, or even more serious financial setbacks, there are options available and the key to unlocking them is working with a mortgage broker who understands the adverse credit BTL market. Lenders will assess your mortgage application based on your particular circumstances, including property value, rental income, and credit history.
If you’re ready to explore your options, speak to a qualified broker who can match you with the right lender and help you take the next step in your property investment journey.
Get help from an experienced mortgage broker
You can speak to one of our specialist mortgage brokers who would be able to guide you through the process. They will advise if there is a lender available and the maximum loan amount based on your circumstances. We are a whole of market mortgage brokerage with access to all lenders. Call us on 01332 470400 or complete the form with your details for us to give you a call back.
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FAQs
Can I get a buy-to-let mortgage with bad credit in the UK?
Yes, it’s possible. While high-street lenders may be cautious, many specialist lenders are open to applicants with adverse credit—such as CCJs, defaults, or missed payments. Your application will depend on the severity and recency of your credit issues, the rental income potential, and the size of your deposit.
What credit issues do lenders consider when assessing my application?
Lenders will review:
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County Court Judgments (CCJs)
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Defaults or missed payments
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Debt Management Plans (DMPs)
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IVAs or bankruptcy
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Recent mortgage arrears
Older or resolved issues are viewed more favourably. Transparency and evidence of financial recovery improve your chances.
What deposit do I need for a bad credit buy-to-let mortgage?
Most lenders require a deposit of 20–40%, depending on your credit history. A larger deposit reduces the lender’s risk and can help offset adverse credit by demonstrating financial stability and commitment.
Will my rental income affect my eligibility?
Yes. Lenders usually require rental income to cover 125–145% of the mortgage repayments. The stronger your projected rental yield, the better your chance of approval—especially if your credit profile is less than perfect.
How can a mortgage broker help with bad credit buy-to-let applications?
A broker specialising in bad credit mortgages can:
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Match you with lenders who accept adverse credit
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Navigate lender criteria and application requirements
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Help you avoid unnecessary credit checks
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Secure access to exclusive rates and products not available directly to the public
Ready to Take the First Step?
Whether you’re a first-time buyer, remortgaging, or moving home, bad credit doesn’t have to hold you back.
Understanding credit scoring can help you prepare for a mortgage application. You can speak to one of our specialist mortgage brokers who would be able to guide you through the process. They will advise if there is a lender available and the maximum loan amount based on your circumstances. We are a whole of market mortgage brokerage with access to all lenders.