Updated: December 08, 2021

Bad Credit Buy-to-Let Mortgages

Looking for a buy to let mortgage with bad credit? Find out what lenders are available and everything you need to do in our in-depth guide.

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No impact on your credit score

Pete Mugleston

Author: Pete Mugleston - Mortgage Expert

Updated: December 08, 2021

There’s no doubt having a bad credit history can make it more difficult to get a buy-to-let mortgage, but it’s not impossible.

By following this guide you’ll have a better understanding of how various credit issues could limit your opportunity of getting the mortgage you need and what steps you can take to improve your chances of success.

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

Yes, it’s possible but it really depends on the severity of the credit issue you’ve had and the length of time since it was resolved. Buy-to-let (BTL) mortgages are assessed slightly differently from residential, with the main focus on the amount of rental return the property can realistically produce over and above the mortgage repayment.

However, pretty much every lender will also conduct a thorough check of your credit history. So, a bad credit score will inevitably limit the number of lenders who are willing to consider your application.

With fewer lenders to choose from and with a higher risk involved, this also reduces your chances of qualifying for the lowest interest rate deals available. But there are a number of specialist lenders who have the expertise to handle these types of cases.

The key challenge is knowing where to look. A mortgage broker with experience in such matters will already know which lenders can help and how they’ll assess each particular credit issue, giving you a better chance of getting the approval you need.

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How do different types of bad credit affect your eligibility?

Not all bad credit issues are assessed in the same way by a lender, so it’s important to understand the different impact each one could have on a buy-to-let mortgage application.

For example, the following credit issues are pretty much universally regarded as being the most severe cases:

Bullet Tick Bankruptcy or Individual Voluntary Arrangement (IVA)
Bullet Tick Repossession
Bullet Tick Loan default
Bullet Tick County Court Judgement (CCJ) issued on a previous mortgage or other loan

If any of the above issues are currently registered on your credit report, then getting a BTL mortgage will be extremely difficult, if not impossible. As previously mentioned, when it comes to the most serious issues, time is the great healer.

In the case of bankruptcy, most lenders will not consider your application until a period of time has elapsed since it was discharged (usually a minimum of 3 years).

At the other end of the scale, if your credit record shows a small number of late or missed payments, most lenders are usually willing to overlook this if the rest of your application – employment record, deposit size, annual income – is strong.

How to get a buy-to-let mortgage with a bad credit record

If you’re looking for a buy-to-let mortgage but worried about how your bad credit history could affect your application, there’s some simple steps you can take to improve your chances.

This is how we’d recommend you do it:

Step 1. Work on improving your credit record

If you’re unsure exactly how your credit record has been affected by a particular issue(s), the first thing you need to do is download your reports and assess the damage. We can help you with that – click on this link here.

Once you know how your current record and score looks, you can then get to work on improving it.

There’s a number of things you can do:

  • Check you’re registered on the electoral roll at your current address
  • Make sure all utility bills and council tax payments are up to date
  • Start to apply for small credit lines – car/home insurance etc. and then build up from there (try not to do too many though)
  • Remove anything on your report that’s incorrect or outdated so it no longer shows

This can take time but patience really is the key here – keep checking your record periodically to see how your score is improving. The more time you spend on this, the better your chances will be.

Step 2. Save up for a deposit

In conjunction with your credit score ‘rebuild’, you can also begin to save up for a deposit. This may also take you some time but, the higher deposit you have, the more lenders will be willing to look at your application.

The deposit requirements will vary from lender to lender, but a good starting point for a buy-to-let mortgage – depending on the severity of the credit issues you’ve had – is usually between 25%-30%.

Step 3. Speak to an experienced mortgage broker

Once you’ve spent some time rebuilding your credit record and saved up a deposit, the next step is to approach a mortgage broker with experience dealing with bad credit issues.

This is probably the shrewdest move you can make, rather than approaching lenders directly, which may ultimately do more harm than good in the long run if a high number of credit checks are undertaken by a variety of lenders.

A broker will identify those lenders who will look more favourably on people who’ve had bad credit issues in the past and help prepare your application. They’ll also be able to provide advice and guidance on all the supporting documentation you’ll require before you apply.

If you get in touch we’ll arrange for an advisor we work with, who has experience in this area, to speak directly with you.

How to find the right lenders

Whether looking for a buy-to-let or residential mortgage, adopting a scattergun approach and applying to as many lenders as you can is a strategy that rarely, if ever, works. If you add a bad credit record into that mix, you could end up doing more harm than good.

Depending on the severity of the credit issue, there are still some mainstream lenders, such as HSBC, NatWest and TSB that will look at buy-to-let applications. What’s important, though, is understanding the criteria they could apply and whether this fits with your situation.

For example, there’s no point applying to a lender to subsequently find out they will need a 40% deposit when you only have 25%.

This is why approaching a broker is a much smarter move. They can outline for you how each lender will assess your credit issue and what deposit you’ll require. Having this information beforehand will save you a lot of time and, potentially, some money too.

Do lenders always conduct credit checks for buy-to-let mortgages?

Almost certainly, yes they do. And the only real way to find who does and who doesn’t is to either speak to each lender directly (not very feasible) or speak to a broker and ask them to find out on your behalf.

It may be tempting to try and skip some of the steps outlined above, to save time, but in the long run that process is a much more thorough way of improving your chances of getting the buy-to-let mortgage you need.

Get matched with a bad credit mortgage broker

Getting a buy to let mortgage is a tricky process as it stands, adding a bad credit issue into this mix can make it even more difficult, but it’s definitely not impossible.

This is why the smartest thing to do is seek the advice of a bad credit broker, with experience in the buy-to-let market, before you do anything else. Their knowledge and expertise could make all the difference.

Call 0808 189 0463 or make an enquiry and we can arrange a free, no-obligation call with a bad credit specialist mortgage broker with the right experience today.

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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 Buy-To-Let mortgages. Ask us a question and we'll get the best expert to help.

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Pete Mugleston

Pete Mugleston

Mortgage Expert

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.

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