Bad Credit Buy-To-Let Mortgage

Having a poor credit profile doesn’t mean you can’t get a buy-to-let mortgage.

We work with lenders across the market that offer a range of adverse credit buy-to-let mortgages for individual and limited company borrowers with poor credit backgrounds. Call us today to see how we can help.

Call us – 01604 212879

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    • All types of adverse credit considered including CCJ’s, Defaults & Arrears
    • Borrow up to 80% LTV
    • Light & Heavy adverse buy to let products available

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    Helping Landlords With Bad Credit Find Great Buy-To-Let Mortgages

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

    Yes, you can, but the options available will depend on the severity of the bad credit.

    Many lenders provide specialist products to help new or existing landlords get a buy-to-let mortgage when they have current or historic credit problems. These lenders tend to be specialist BTL lenders instead of mainstream banks and building societies.

    If the adverse credit is minor and not very recent, then it’s possible that terms could be secured through a standard buy-to-let lender. We’d recommend that you get an up-to-date credit report before exploring options, as we’ll need to know the complete details to get the right product and avoid multiple searches.

    Bad Credit Buy-To-Let Mortgage Guide

    Author: Darren Ferguson – Mortgage Specialist & Owner

    First Published: 12th May 2023

    Last Updated: 18th January 2024

    Read Time

    Read Time – Approximately 8 Minutes

    Our bad credit buy-to-let guide should be helpful, but it’s always best to speak with an adviser to discuss your circumstances and get the best advice. Call us on 01604 212879 should you have any questions.

    We can help…

    If you have bad credit and are looking to fund the purchase or refinance of a buy-to-let property, then subject to circumstances and available deposit, we’ll have options to help.

    We have access to the whole market, and depending upon the extent of the adverse credit, funding could be available through a standard buy-to-let lender.

    Call us on 01604 212879 for a no obligation buy-to-let mortgage review

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    Up To 3 CCJ's in Last 12 months

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    Up to 3 Defaults in Last 12 months

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    Up to 3 Missed Mortgage Payments / Secured Arrears In Last 12 Months

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    Unsecured Arrears Not Assessed

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    Loans from £30,000 to £2,500,000

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    Loan To Value Up To 75%

    What do lenders classify as bad credit?

    Mortgage lenders will typically classify any of the following as adverse credit:

    • Missed or late payments
    • Default Notices
    • Count Court Judgements (CCJ)
    • Bankruptcy
    • Individual Voluntary Arrangement (IVA)
    • Previous Repossession
    • Debt Management Plans

    I have a low credit score. Does that mean I have bad credit?

    No, a low credit score could be due to adverse credit, but it could also be because you have never had credit and, therefore, have no historic credit profile for a lender to consider, resulting in a low score.

    Many first-time buyers can experience this issue when they buy their first home and need a residential mortgage.

    Does a low score mean I need a bad credit mortgage?

    Not necessarily, but it depends on the reason for the low score. Some lenders use credit scoring, and others use a credit check. Credit scoring means you’ll need to meet a minimum score, which is typically only known to the lender, whilst credit checking looks for bad credit events, such as missed payments, defaults and CCJs.

    If your low score is due to adverse credit – then yes, you’ll need to use a specialist buy-to-let lender that provides adverse credit BTL mortgage products.

    If your low score is due to no previous credit history – then it’s still possible to get a buy-to-let mortgage from mainstream lenders, but we may also need to look at a lender that does a credit ‘check’ rather than a credit ‘score’.

    What is the minimum deposit needed for a buy-to-let mortgage with bad credit?

    In the current market, as of November 2023, the minimum deposit required is 15%, subject to the severity of the credit. This is a maximum loan-to-value (LTV) of 85%.

    Depending on the severity of the adverse credit, a more typical deposit requirement might range from 20% to 30% of the property value.

    Whilst there will be other criteria to meet, the deposit contribution is arguably the most significant factor in determining whether a bad credit buy-to-let mortgage will be available. If you have a deposit of up to 25%, then even with heavy adverse, options will be available, albeit at increased rates. 

    How do I apply for a BTL mortgage when I have bad credit?

    The first step before applying for any buy-to-let mortgage is to obtain an up-to-date copy of your credit report because an adviser will need to know the full details of the bad credit before they can discuss the options available.

    Several credit agencies report on credit data, and different lenders will use different agencies, so it’s best to try and get a report that covers as many as possible.

    We recommend ‘checkmyfile’ as it provides data from the four leading agencies. You can obtain a free report by clicking the button below. Just remember to cancel within the 30-day free trial period.

    Why do you need to see my credit report?

    The product that a lender will offer depends on the following factors concerning the bad credit event:

    • The type of adverse (missed payment, default, CCJ, etc.)
    • The date of the adverse
    • The exact amount of the adverse
    • The type of credit the adverse credit was linked to (loan, credit card or mortgage, for example)
    • How many missed payments in a row
    • Is the debt now satisfied, or is it still outstanding?

    The more information an adviser has, the easier it will be for them to confirm the options available.

    Concerned About Your Credit?

    Get the only credit report that checks data from all four credit agencies:

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    (‘Free’ report relates to an initial 30 day free-trial, then £14.99 a month – you cancel anytime online)

    Which lenders offer bad credit buy-to-let mortgages?

    There are many buy-to-let lenders in the UK, and we tend to classify a lender as either a standard or a specialist lender.

    Standard buy-to-let lenders will not typically lend to applicants with current or historic bad credit; these tend to be your well-known mainstream lenders. There are some exceptions if the adverse credit is minor, but on the whole bad credit will not be acceptable to them.

    Specialist lenders will be much more receptive to applicants that have bad credit and will have specific products to cater for different credit profiles.

    Some of our specialist BTL lenders

    (more willing to consider adverse credit applicants)

    • Castle Trust
    • CHL Mortgages
    • Fleet Mortgages
    • Foundation Home Loans
    • Hampshire Trust Bank
    • Interbay
    • Kensington
    • Kent Reliance BS
    • Keystone
    • Landbay
    • Lend Invest
    • Lend Co
    • MFS
    • Pepper Money
    • Precise Mortgages
    • Quantum Mortgages
    • Shawbrook Bank
    • The Mortgage Lender
    • Together Money
    • Vida Home Loans
    • West One
    • Zephyr Homeloans
    • & More.

    Is there a minimum credit score I need to achieve to get a buy-to-let mortgage?

    Some buy-to-lenders that offer mortgages to applicants with bad credit have internal scoring systems that will dictate whether they will or won’t provide a loan and, if they will, which product they will offer. None of these lenders publicises what that minimum score will need to be, and this score is not the same score you will see on your credit report and will be an internal scoring system known only to the lender.

    Most lenders that offer bad credit buy to let mortgage products do credit checks rather than scoring. 

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    How do i apply?

    Applying for a Bad Credit BTL mortgage is simple, and we can typically get a decision in principle the same day. Call us today on 01604 212879 to see how we can help.

    Will bad credit affect affordability for a buy-to-let mortgage?

    Yes, it could. When lenders assess affordability for buy-to-let mortgages, the interest rate payable is often the ‘stress’ rate used to calculate the maximum loan based on the rental income received. In simple terms, the higher the rate, the less you can borrow.

    By nature, bad credit buy-to-let mortgage products will come with higher interest rates than standard buy-to-let products, meaning loan amounts can often be less.

    There are some valuable features some lenders can offer, such as ‘top slicing’, where your personal income can also be taken into account to help support a higher loan amount. It’s best to speak with an adviser who can then offer guidance on the best lenders to approach and also what the maximum loan amounts will be.

    Can I get pre-agreed for a buy-to-let mortgage when I have bad credit?

    Yes, you can. We can get a decision in principle from most lenders either the same day or within 24 to 48 hours. This puts you in a much stronger position when you come to an offer on a property and will also help you understand costs and your limits before viewing any properties.

    We’ll need an up-to-date credit report before we run any decision in principle.

    How can a mortgage broker help me get a poor credit buy-to-let mortgage?

    When you have bad credit, getting advice is essential. The alternative is to approach lender after lender, bank after bank, with perhaps lots of wasted time and, in the worst case, multiple declines, which could, in turn, further affect your credit file.

    A good adviser will, in most instances, be able to tell you what your options are without the need for multiple credit checks. It’s often the case they have access to products you might not have access to directly; for example, some lenders insist that you go through a broker.

    At Adept Mortgages, we do not charge a fee for our services, whereas many brokers that deal with buy-to-let mortgages for applicants with poor credit will charge fees, which could include upfront fees and a further fee on completion.

    Call us on 01604 212879 for a no obligation buy-to-let mortgage review

    Can I get a buy-to-let mortgage with missed payments?

    Yes, but it will depend on the type of missed payment. Lenders classify credit as secured or unsecured, with secured arrears treated more harshly.

    Secured arrears – this is where credit is ‘secured’ against an asset, such as a property, the most common being a mortgage. Lenders take secured arrears very seriously and will generally want to see no missed payments in the last 12 months, whilst others can work with up to 3 missed payments in the previous 12 months.

    Unsecured arrears – where the credit is not secured against an asset, for example, a credit or store card. Lenders take a lighter view on unsecured debt, with some even ignoring unsecured arrears (provided they haven’t gone to default).

    A lender will typically issue a ‘default’ notice when 6 months payments have been missed in a row.

    Can I get a buy-to-let mortgage with a CCJ?

    Yes, but the mortgage options available to you will depend on the amount, date and whether the CCJ is satisfied or not. Some standard lenders can consider small CCJs, typically under £250 and satisfied, subject to how recently it was registered.

    A County Court Judgement is issued when someone you owe money to takes you to court. Typically, if the debt is cleared within 30 days of the judgment being issued, the CCJ can be removed from your file.

    Can I get a buy-to-let mortgage when I have a default?

    Yes, and this is much the same as how a CCJ will be treated in that it will depend on the date issued, the amount and whether the default has been satisfied, or is still outstanding.

    A default notice is typically issued when you have 6 months or more in arrears for credit such as a personal loan, a credit or store card or a bank account for example.

    Some lenders like to see that a default is settled, whereas others don’t care if it’s settled.

    IVAs and Debt Management Plans

    Having an Individual Voluntary Arrangement (IVA) in place can make it more challenging to obtain buy-to-let mortgage funding. It’s a formal agreement, with an agreement to pay an amount toward outstanding debt based on the amount of your disposable income. It could, therefore, be argued that if you can afford to look at a buy-to-let mortgage, then more could be paid toward the IVA. It’s also likely you’ll need consent from the IVA practitioner.

    Debt management plans are a more informal agreement and not as challenging. It will be subject to the history of the DMP and how well it has been managed.

    An example of a bad credit buy-to-let mortgage lenders product matrix

    The table below shows criteria from a particular lender with 3 different products, and your credit profile will determine the product you fall into.

    Table showing mortgage products for someone with bad credit

    Product 3 allows for a greater level of bad credit, but the rate for that product will be higher than that of product 1.

    Product Guide

    If we use product 2 as an example. In order to qualify for product 2:

    1. The applicant must not have had any defaults or CCJs registered in the last 24 months.
    2. Must not have any unsatisfied CCJ’s, even if registered more than 24 months ago that are greater than £2,500.
    3. Must not have missed any secured payments in the last 12 months (this would typically be mortgage payments)
    4. Must not have more than 1 unsecured missed payments in the last 6 months, whereas with product 3, they must not have had more than 3 missed payments in the last 6 months.
    5. Where the applicant has had a missed payment in the last 6 months, the missed payment or payments must not total more than £500.

    How To Apply

    Its simple to apply, just call us on:

    01604 212879 and we’ll handle everything for you.

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    Let’s talk you

    It’s not just about the property. You’ll need to meet specific criteria, so it’s important we understand a little about your background to make sure we find the best option for you. Time spent at the front end is time saved at the back end!
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    Let’s talk property

    We’ll need to know all about the property, such as value, type, location, income and ultimately, your plans. The more we know, the better, and we’ll guide you through what we need to know.
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    Let’s talk options

    Time to piece it all together and talk about your options. We’re firmLets get movin believers in straight talking, so we’ll tell you what can and can’t be done and present you with options best suited to your requirements.

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    Let’s get moving

    If you’re happy with the options discussed, it’s time to get things moving and get an agreement in principle. We’ll handle everything and support you along the way to help ensure your application is as smooth as possible.

    What are the advantages of a bad credit buy-to-let mortgage?

    Before entering into any mortgage agreement, you should consider whether the product works for you both now and in the future.

    Adverse credit BTL mortgages can offer an excellent opportunity to get a foothold on the investment ladder where you might ordinarily have had to wait until your credit profile improved.

    Some advantages are:

     

    • Access to mortgage funding – these lenders offer the opportunity for an individual who may not otherwise have been able to obtain a mortgage from a more traditional or standard BTL lender.
    • Rebuild your credit profile – taking out a mortgage and providing you maintain the required repayments can go some way to repairing your credit profile,  allowing you to potentially refinance to a more standard lender when your deal ends. (subject to status at that time)
    • Market entry – BTL can be a good investment opportunity, providing a regular income source and the potential for increases in property value.

    What are the disadvantages of a bad credit buy-to-let mortgage?

    Bad credit BTL mortgages are not for everyone. Whilst there are advantages, there are several disadvantages that should also be considered, such as:

    • Higher interest rates – that will mean higher monthly mortgage repayments, impacting cash flow and profit.
    • Restricted options – The choice of lenders available to you will likely be restricted, especially to applicants with more severe credit. This will limit your product options both now and potentially when you come to refinance.
    • Stricter criteria – you may be required to put down a larger deposit than ordinarily required or provide more documentation.
    • Increased costs – as well as higher interest rates, you may incur higher arrangement fees.
    • Reduced product features – some products may restrict certain features, such as the ability to make overpayments without penalty.

    It’s important to weigh the pros and cons of a bad credit buy-to-let mortgage; a good adviser will help you understand these.

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    Why do business with us?

    All buy-to-let lenders have different criteria you need to meet. We’ll help point you in the right direction to help ensure your application moves smoothly and efficiently.

    How can I improve my chances of getting a buy-to-let mortgage with bad credit?

    There are several steps you can take to increase your chances of being accepted for a buy-to-let mortgage when you have bad credit, such as:

     

    • Get an up-to-date credit report – You should obtain an up-to-date credit to determine precisely what is registered against you and when. Check the report for any inaccuracies and make sure it has basic information right, such as your current address.
    • Try to clear any debts you have, such as missed payments, CCJ or defaults. Many lenders that lend to applicants with historic adverse credit will want to see that the debt is settled, although this is not always necessary.
    • Prepare an explanation for the bad credit – lenders understand that bad credit can arise due to a life event, such as redundancy, illness or separation from a partner. If there is a valid explanation as to why something happened, and it can be evidenced that it was a one-off, then lenders can look at this favourably.
    • Consider adding another applicant – if applying as an individual applicant is proving difficult, consider applying with another individual, such as a family member with a strong credit profile. This can go some way to offsetting a lender’s concerns.
    • Save for a larger deposit – A larger deposit may open up more lenders. It will also reduce your mortgage balance which is important when you may have to pay higher rates for a while. In the future, you may be able to refinance and pull that money back out of the property, but this will be subject to your status at that time. (and the market)
    • Consider if now is the right time – If you have had recent adverse credit, will waiting 3 to 6 months increase your options?
    • Be mindful of the type of property – applying for a mortgage on a standard buy-to-let property may have a better chance than an HMO property or a Multi-Unit Block for example.
    • Lastly, speak to an adviser! – A good adviser will discuss all your options with you and advise on the best course of action.
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    Get a Decision In Principle!

    If you have made an offer, the selling agent will first want to see your agreement in principle. Ensure you are in the best position to make the offer and ask for a free DIP today!

    Find out more about limited company buy-to-let mortgages

    Find out more about interest-only buy-to-let mortgages

    Learn more about Let-To-Buy Mortgages

    Find out more about Holiday Let Mortgages

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    Frequently Asked Questions

    Do I need a minimum Income for a bad credit buy to let mortgage?

    No, we have access to lenders that do not have any minimum income requirements. We’ll need to know more about your situation before confirming if these lenders will be available.

    Can I get a 100% BTL mortgage with bad credit?

    Yes, but only if you have additional property with sufficient equity to use as security. Typically, the other property will need to have at least 50% equity.

    Can a first time buyer get a bad credit buy to let mortgage?

    Yes, but options will be limited to 1 or 2 lenders at best and will depend on the severity of the credit. The lender will also want to understand why a buy-to-let would be purchased instead of your first home. 

    Thanks for reading our bad credit buy-to-let mortgage guide!

    A selection of some of our lenders that offer buy-to-let mortgages for bad credit

    We source our mortgages from the whole market, from the leading High St Banks & Building Societies to specialist buy-to-let mortgage lenders. A selection of our limited company buy-to-let lenders is shown below.