0808 189 0463


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        Payday Loans and Mortgage Applications

        Worried that a historic payday loan will ruin your chances of getting a mortgage? The brokers we work with can help you get approved.

        Firstly, have you taken out any Payday loans in the past 12 months?

        No impact on your credit score

        Do you have a payday loan on your credit report? Are you worried that it will make getting a mortgage difficult or impossible? You’re not alone. But, the truth is they don’t have to spell the end of your home ownership dream

        By using this article as a guide you’ll have a better understanding of how to improve your chances of securing a mortgage and who to turn to for the best advice.

        Can you get a mortgage after a payday loan?

        Yes, of course but it can be tricky, particularly if you’re trying to do it on your own. Lenders will count any loan you take out with a repayment period of less than twelve months as a payday loan.

        Some lenders simply will not accept a mortgage application if a payday loan exists on your credit record – whether paid off or ongoing. But there’s others who will. The challenge is finding out who will and who won’t.

        Get Started with a Broker

        Maximise your chance of approval with specialist advice from an expert in Bad Credit Mortgages.

        How do you do it?

        The mortgage process can feel a little daunting at the start, but here’s some steps you can take to give your application the best chance of success.

        Check and optimise your credit reports

        First things first, check your credit score! Payday loan mis-use can have a negative impact on your credit history, so make sure you’ve read through the report. Any inaccuracies can, and should, be removed.

        Find a specialist mortgage broker

        To avoid getting lost in the woods the smart move is to seek the help of an experienced mortgage broker who understands these situations and can help you avoid multiple rejections or high interest rates.

        They’ll be able to guide you through each step of the process and how to avoid all the usual pitfalls along the way.

        If you make an enquiry we’ll match you with a broker who helps people with payday loans get the mortgage they need every day.

        Prepare your paperwork and apply!

        The best way to get your mortgage application ready is by making sure you have all of the documents (evidence of earnings, payslips, certified accounts etc.) that are needed.

        Your broker can guide you on this and manage your application on your behalf, so don’t worry – you won’t have to do this on your own.

        Which mortgage lenders accept applicants with a history of payday loan use?

        Some mainstream lenders, such as Post Office Money and Virgin Money, won’t lend to anyone with a historic payday loan, but there are providers who offer more specialist contracts with some additional conditions to the agreement – these will often include a higher interest rate offer.

        Here are some examples of lenders’ specific criteria for this…

        • Norton Home Loans –  if you can provide a reasonable explanation for your payday loan use
        • Hodge – if the payday loan is over 12 months old, but they will thoroughly inspect the details of your credit report
        • Together – they will decline payday loan applicants if they’re first-time or Right to Buy borrowers.
        • Newcastle Building Society – if you’ve had one or more payday loans in the last six months, they will request extra underwriter scrutiny

        Some mainstream lenders, such as HSBC, will also consider mortgage applications from payday borrowers, but keep in mind that you may be approved at high rates due your borrowing history. Mortgage lenders who are more specialised in providing offers to payday loan applicants often apply minimal or lower rate increases.

        If you’re looking for a lender who operates outside of the mainstream with more competitive rates and fees, this is exactly where your broker’s inside-knowledge can prove invaluable. They can identify who these lenders are and what offers they currently have available.

        The information outlined in this section was correct at the time of writing (October 2021). Lenders reserve the right to update and amend their criteria at any time. 

        Which lenders have you already tried?

        40% of our customers had been declined elsewhere before coming to us. The brokers we work with will be able to assess your circumstances and then identify the right lender for you instead of going direct.

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        Mortgage eligibility criteria for payday loan users

        Eligibility terms will vary from one lender to the next, but we’ve compiled a list of criteria which most commonly impact applications:

        How long ago was the payday loan taken out?

        As a general rule of thumb, the more time that’s passed since your payday loan was first taken out (at least one year), the better your chances of  success. If you repaid your loan during the required period or earlier, this will help demonstrate reliability.

        Overall affordability

        Naturally, the amount of your income will be a factor in the approval process. Most lenders will cap their lending at 4.5x your annual earnings, while others will base loan size on monthly disposable income.

        Income types such as self-employment, zero-hour contracts or variable income contracts usually need additional supporting evidence to back up your earnings history.

        Credit score

        Do you have multiple credit score issues or just one payday loan default? Lenders will take your overall credit score into account and will look at the bigger picture and stability of your finances and repayments.

        How much deposit will I need?

        Most lenders will require a minimum 15% deposit for payday loan mortgages. Low deposit offers (5%-10%) are rare and would be difficult, but there are one or two lenders who don’t require a large deposit in some cases.

        The more deposit you can put down and the lower your loan-to-value ratio, the better the chances of approval are.

        Get matched with an experienced mortgage broker

        It’s not easy to get a mortgage if you have a payday loan on your credit report. But with the help of an expert broker, you can find the best possible rates and terms for your situation and make your homeownership goal a reality.

        Contact us today to be matched with one of the specialist brokers we work with. We don’t charge a fee to make the connection and there’s no obligation to take things further after an initial consultation. Just give us a call at 0808 189 0463 or make an enquiry.


        The past six years of your credit history including any borrowing or missed payments will show up when a credit search is requested. When applying for a mortgage, it’s best if you declare your payday loan in advance and offer an explanation as to the context. Generally speaking, the older the registration date for your payday loan, the less impact it will have.

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        We can help! We know everyone's circumstances are different, that's why we work with mortgage brokers who are experts in bad credit mortgages. Ask us a question and we'll get the best expert to help.

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        Pete Mugleston

        Pete Mugleston

        Mortgage Expert, MD

        About the author

        Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

        Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for OMA of course!

        FCA Disclaimer

        *Based on our research, the content contained in this article is accurate as of the most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms that are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs.

        Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.