A bad credit mortgage is a normal UK mortgage priced for risk. In 2026 you should expect a rate roughly 1% to 5% above the high-street best buys, a deposit of 10% to 25% depending on how recent the problem is, and a specialist lender rather than a household-name bank. The good news is that adverse credit is mostly a pricing question, not a permanent exclusion — and the price falls sharply as the marker ages.
Last reviewed: September 2026. Figures apply to England, Scotland, Wales and Northern Ireland. This is general information, not financial advice — a mortgage is secured on your home and can be repossessed if you do not keep up repayments.
Key facts at a glance
- Most adverse credit markers stay on your file for six years from the date they were registered, not from the date you paid them.
- Lenders care far more about how recent a problem is than how large it was. A £200 default from last month is a bigger obstacle than a £6,000 default from four years ago.
- A satisfied default or CCJ is materially easier to place than an unsatisfied one at the same age.
- Every extra 5% of deposit typically shaves 0.25% to 0.5% off the rate offered.
- Specialist adverse lenders are mostly intermediary-only, meaning you cannot apply direct — you need a broker with access.
What counts as bad credit to a UK mortgage lender
“Bad credit” is not one thing. Lenders grade it in a rough hierarchy, and where you sit on it determines both which lenders will look at you and what you pay.
| Marker | Severity | Stays on file |
|---|---|---|
| Late payment on a credit account | Mild | 6 years |
| Missed payment / arrears marker | Mild to moderate | 6 years |
| Default | Moderate | 6 years from default date |
| County Court Judgment (CCJ) | Moderate to serious | 6 years (removed if paid within 1 month) |
| Debt Management Plan | Moderate | Visible via the accounts it covers |
| Individual Voluntary Arrangement (IVA) | Serious | 6 years from start |
| Bankruptcy | Serious | 6 years from bankruptcy order |
| Repossession | Most serious | 6 years, and remembered longer in practice |
Two things that are not on that list but often assumed to be: having no credit history at all, and being on a low income. Neither is adverse credit, though both can cause a decline for different reasons.
Bad credit mortgage rates in 2026
Against mainstream rates of roughly 4% to 5%, the adverse market in 2026 prices approximately as follows. These are indicative bands rather than quotes — every lender scores its own way.
| Credit situation | Typical deposit | Indicative rate |
|---|---|---|
| Missed payments only, over 12 months old | 10–15% | 5% – 6.5% |
| Satisfied defaults, 2+ years old | 15% | 5.5% – 7% |
| Recent or unsatisfied defaults | 20% | 6.5% – 8.5% |
| Satisfied CCJs, 2+ years old | 15–20% | 6% – 8% |
| Recent or unsatisfied CCJs | 20–25% | 7.5% – 9.5% |
| Post-IVA | 15–25% | 6.5% – 9% |
| Post-bankruptcy (discharged) | 25% | 7% – 10%+ |
The pattern is consistent: time and deposit are the two levers you can actually pull. A borrower with a three-year-old satisfied default and a 25% deposit is often within touching distance of high-street pricing. The same borrower with 10% down and the default six months old is looking at a different market entirely.
Why the rates are higher
Specialist lenders fund differently from retail banks, underwrite each case manually rather than by automated score, and price in a higher expected arrears rate. Manual underwriting is genuinely useful to you — it is why a specialist can accept a case a high-street automated decision rejects outright — but it costs more to deliver, and that cost appears in the rate and often in an arrangement fee of £995 to £1,995.
Deposit: the single biggest variable
Deposit does more work than any other factor in an adverse case, because it directly reduces the lender’s loss if things go wrong.
- 10% deposit (90% LTV) — possible with mild, aged adverse only. Fewest lenders, highest rates.
- 15% deposit (85% LTV) — the practical entry point for defaults and older CCJs.
- 20% deposit (80% LTV) — opens up recent defaults and unsatisfied markers; noticeably better pricing.
- 25% deposit (75% LTV) — where the best adverse-credit rates live, and the usual requirement after bankruptcy or an IVA.
- 30%+ deposit — some lenders will price close to mainstream regardless of history.
Which lenders actually lend on adverse credit
The UK market splits into three tiers, and knowing which tier you belong in saves a great deal of wasted application.
- High-street banks and building societies. Automated scoring, cheapest rates, minimal tolerance. A single old missed payment may pass; a default rarely does.
- Mid-tier and “near prime” lenders. Manual review, modest premium over the high street, comfortable with aged and satisfied markers. This tier handles a surprising share of cases people assume are hopeless.
- Specialist adverse lenders. Full manual underwriting, will consider recent defaults, live CCJs, discharged bankruptcy and complex income. Highest rates, and almost always intermediary-only.
Because the second and third tiers are broker-distributed, going direct to lenders will systematically show you a worse picture of your options than actually exists.
What lenders assess besides your credit file
- Affordability. Income multiples of 4 to 4.5 times are standard, stress-tested against a higher notional rate.
- Employment stability. Three to six months in a role for employed applicants; typically two years of accounts or SA302s if self-employed, though some specialists accept one.
- Bank statement conduct. Three to six months of statements. Gambling transactions, unarranged overdraft fees and returned direct debits do real damage here, sometimes more than the credit file itself.
- Property type. Non-standard construction, flats above commercial premises and short leases all narrow the lender list further, which is painful when adverse credit has already narrowed it.
- Deposit source. Gifted deposits need a donor letter; large unexplained credits will be queried.
How to improve your chances before you apply
- Pull all three credit files. Experian, Equifax and TransUnion hold different data, and lenders do not all use the same one. Errors are common and free to dispute.
- Satisfy what you can. Paying a default or CCJ does not remove it, but “satisfied” status moves you into meaningfully better pricing bands.
- Register to vote at your current address. A missing electoral roll entry causes declines that have nothing to do with your actual creditworthiness.
- Leave your credit file alone for three to six months. Every hard search leaves a footprint; a cluster of them looks like distress borrowing.
- Clean up your bank statements. Six months of tidy conduct with no unarranged overdraft use is worth more than most applicants realise.
- Build the deposit rather than rushing. Six more months of saving may move you a whole LTV band and cut the rate more than any other action available to you.
Advantages and drawbacks
Where a bad credit mortgage helps
- It gets you onto the ladder years earlier than waiting for markers to drop off.
- Two years of clean mortgage payments is itself powerful credit repair.
- Criteria are genuinely flexible — complex income, contract work and recent job changes are routine to specialists.
- You capture any property appreciation over the waiting period rather than paying rent through it.
Where it costs you
- Higher monthly payments, sometimes several hundred pounds more than a mainstream equivalent.
- Larger deposit requirement, which delays purchase.
- Arrangement fees are typically higher, and early repayment charges can be steeper.
- Product choice is narrow, so you have less room to shop on features.
Common mistakes to avoid
- Applying to several lenders at once. Each decline adds a hard search and makes the next application harder.
- Assuming a high credit score means approval. Scores are the agencies’ own inventions; lenders read the underlying data.
- Hiding a marker from your broker. It will surface at underwriting, and by then you have wasted weeks and a valuation fee.
- Fixating on the headline rate. Compare the total cost over the fixed term, fees included.
- Forgetting to remortgage. The mistake that costs the most money is staying on an adverse product after the markers have aged out. Diarise a review six months before the fixed rate ends.
Should you use a mortgage broker?
For adverse credit, almost always yes. Most of the lenders who can help are intermediary-only, criteria change frequently and are not published, and a broker who places these cases weekly knows which lender tolerates which marker at which age. That knowledge is what avoids the hard-search spiral. Check the adviser is authorised on the Financial Conduct Authority register, and ask specifically how many adverse cases they placed in the last twelve months.
Conclusion
A bad credit mortgage in 2026 is a question of timing and deposit far more than one of eligibility. Aged, satisfied markers with 20% down land close to mainstream pricing; recent, unsatisfied markers with 10% down are expensive and hard to place. The most valuable things you can do are to check all three credit files for errors, satisfy what you can, keep six months of clean bank statements, and then use a broker with genuine specialist-lender access — and to remortgage as soon as the markers age out.
More guides in Law, and if you are buying your first home, read our guide to first-time buyer stamp duty relief before you set your budget.
Frequently Asked Questions (FAQs)
Can I get a mortgage with a default on my file?
Yes. Satisfied defaults over two years old are widely accepted with a 15% deposit at roughly 5.5% to 7%. Recent or unsatisfied defaults usually need 20% down and price around 6.5% to 8.5%.
How long do I have to wait after bankruptcy?
Some specialists will consider you from one year after discharge with a large deposit, but pricing improves substantially at three years and again at six, when the record drops off your file. A 25% deposit is the usual requirement.
Does paying off a CCJ remove it?
Only if you pay it in full within one month of judgment, in which case it can be removed from the register. Otherwise it stays for six years but is marked satisfied, which lenders treat considerably more favourably.
How much deposit do I need with bad credit?
Typically 10% to 15% for mild aged issues, 20% for recent defaults or CCJs, and 25% after an IVA or bankruptcy. Each additional 5% tends to cut the rate by around 0.25% to 0.5%.
Will a bad credit mortgage damage my credit further?
No — the opposite. Once it completes, consistent monthly payments on a mortgage are among the strongest positive entries a credit file can carry.
Can I remortgage onto a normal rate later?
Usually yes. Once markers are three or more years old and you have a clean payment record on the mortgage itself, mainstream and near-prime lenders open up. Start the review six months before your fixed rate ends.
Do bad credit mortgages have higher fees as well as higher rates?
Generally yes. Arrangement fees of £995 to £1,995 are common, and early repayment charges can be higher, so compare the total cost across the fixed term rather than the headline rate alone.
