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Mortgage Advisor & Director
If you are applying for a mortgage with a history of bad credit, you might need a specialist lender. Here you will learn which lenders are available for borrowers with adverse credit or limited credit history, and how to choose the right one.
What is a bad credit mortgage lender?
A bad credit mortgage lender is a type of specialist mortgage provider for borrowers with a history of adverse credit, a low credit score or limited credit history. They have a more flexible criteria than high street lenders but their mortgages tend to have higher rates.
While a mainstream mortgage provider might reject anyone with credit issues outright, bad credit lenders can take a broader view of your case, take the age and severity of your credit problems into account, and factor this information into their lending decision.
The main difference between high street lenders and bad credit lenders is as follows:
- Bad credit lenders are far more flexible with adverse credit borrowers
- Their deposit requirements can be higher
- Rates and fees on their mortgages can also be higher
- Many bad credit lenders can only be accessed through a broker
Just as there are lenders who specialise in bad credit, there are brokers who work exclusively in this area too - speaking to one of them can significantly improve your chances of mortgage approval and help you avoid being stung by unfavourable rates.
Who are the best bad credit mortgage lenders?
The ideal mortgage lender for you won’t necessarily be right for another applicant with a different set of credit issues, so the “best” lenders can vary depending on the borrower.
Below you will find a list of some of the UK’s most reputable bad credit mortgage lenders:
1. Kensington Mortgages
Kensington are a specialist mortgage lender that has been helping borrowers with bad credit onto the property ladder for more than 25 years. They can be flexible with most credit issues, but severe problems such as bankruptcies need to have been discharged for six years.
This lender has an impressive average rating of 4.6/5 on consumer review platform Trustpilot. They also specialise in mortgages for self-employed and older borrowers.
As Kensington Mortgages is an intermediary-only lender, you will need a mortgage broker, like Teito, to access their product range.
2. Bluestone Mortgages
Bluestone Mortgages is an intermediary-only specialist lender who can be very flexible with many forms of bad credit, including IVAs, debt relief orders and even bankruptcies.
With an average rating of 4.8/5 on Trustpilot, Bluestone currently offers bad credit mortgages up to 85% LTV (15% deposit required) or 95% through the Deposit Unlock scheme.
3. Pepper Money
This lender specialises in helping borrowers with credit issues including CCJs, defaults, debt management plans and bankruptcies. They can lend up to 85% LTV and also have specific products for self-employed mortgage applicants and those looking for a secured loan.
Pepper Money has an average rating of 4.7/5 on Trustpilot and offers bad credit mortgages through government schemes including Right to Buy, Shared Ownership and First Homes.
4. Aldermore
Aldermore is a specialist lender with a wide product range that includes investment mortgages as well as residential. They cater for borrowers with most forms of bad credit, but bankruptcies and debt relief orders need to have been discharged for at least six years.
They have an average rating of 4.5/5 on Trustpilot and lend up to 90% LTV (residential).
5. Vida Homeloans
Vida Homeloans has a broad range of products for borrowers with bad credit, from less severe issues such as missed payments and defaults, to serious issues like bankruptcy.
They have flexible products for self-employed professionals, applicants who are using the Right to Buy scheme and joint borrower, sole proprietor applicants. Their Trustpilot rating currently sits at 4.4/5, and their products can only be accessed via mortgage brokers.
6. Kent Reliance
Describing themselves as a “national bank with a local feel”, Kent Reliance is a lender that offers an array of different financial services, as well as mortgages. Their offering also includes savings, ISAs and bonds, in addition to specialist mortgages.
Their bad credit mortgages are for borrowers with less severe issues, such as missed payments or arrears, but they will also lend to customers with county court judgments under the right circumstances. More severe issues like repossession are not accepted.
Kent Reliance’s Trustpilot rating is 4.1/5 but this is based on all of its products and services, not just mortgages. Its mortgages can only be accessed through a broker.
7. Together
Lending since 1975, Together is a mortgage provider with a track record in specialist finance. This includes bridging loans, auction finance, and bad credit mortgages.
Their bad credit mortgages are aimed at borrowers with issues including arrears and CCJs, but debt management plans, IVA and other severe issues may not be accepted.
Together has a rating of 4.3/5 for all of its products and services.
8. Norton Home Loans
Norton Home Loans is a specialist lender that can be very accommodating with borrowers who have bad credit. They can even lend to applicants with bankruptcies or debt relief orders, providing the issues were resolved more than three years ago.
Norton, who offer home finance on a first and second-charge basis, has a Trustpilot rating is 4.⅖. Commercial mortgages and buy-to-let finance is not available through them.
You can compare the latest bad credit mortgage rates from these lenders, or speak to one of our brokers about their products, by choosing your preferred option below:
Find the right bad credit mortgage lender today
Do high street lenders offer bad credit mortgages?
Some high street mortgage lenders offer mortgages to borrowers with bad credit, but your chances of approval and the number of options you have will be far fewer.
Generally speaking, mainstream banks and building societies are only likely to approve you if your credit problems are minor or the issue occurred a long time ago, and the interest rates and deposit requirements you are quoted are likely to be higher than average.
Below you will find examples of the types of bad credit high street lenders can help with:
- Halifax: Offer mortgages to borrowers with moderately serious credit issues including defaults, missed payments and CCJs.
- NatWest: Can lend for defaults, CCJs and discharged IVAs and debt management plans. Anything more serious needs to have been discharged for six years.
- Nationwide: Can lend when issues such as IVAs are present, provided they have been discharged for 3-6 years. More serious issues may trigger a decline.
- HSBC: Usually only lends for less severe issues such as defaults and late payments, but exceptions can be made under the right circumstances.
- Santander: Can accept issues such as CCJs and debt management plans if they were discharged 3-6 years ago, but more serious issues may trigger rejection.
Although high street lenders have some options for borrowers with bad credit, they tend to have far fewer options for borrowers with adverse compared to specialist providers.
It is highly recommended that you speak to a mortgage broker to get an overview of what is available from specialist lenders if you have bad credit of any kind.
How to find the right bad credit mortgage lender
Approaching a bad credit mortgage lender directly is not recommended as the vast majority of them will only let you apply for their products through brokers, like Teito.
The best way to find the right lender for your bad credit mortgage is via a broker. Not only will they help you access specialist lenders, they will compare what these providers would offer you against every deal on the high street to make sure you end up with the best one.
Here are just some of the benefits of choosing Teito for you bad credit mortgage:
- Access to the entire market, including exclusive deals
- The option to compare the latest rates yourself, for FREE
- Expert advice from brokers who specialise in bad credit
- Secure a mortgage in principle in minutes
Ready to compare the latest deals available and take advantage of a free, no-obligation chat with a broker who specialises in bad credit mortgages? Get started here.
FAQs
Yes. Some bad credit lenders, such as Pepper Money and Kensington offer mortgages through government schemes like Shared Ownership. These mortgages are also available from some high street lenders who accept certain types of adverse credit.
Choosing an Adviser
Selecting a qualified and experienced mortgage adviser is of great importance. To choose a suitable adviser, evaluate their qualifications, experience, and reputation, and ensure they are regulated by the Financial Conduct Authority (FCA).
Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.