How does bad credit affect a buy-to-let mortgage?

Bad Credit Mortgages
Bad Credit Mortgages

When you’re hoping to buy an investment property but have an adverse credit history, you may be wondering how bad credit can affect a buy-to-let mortgage. Whilst it might not be easy to be approved for a buy-to-let mortgage with adverse credit via a high street lender, there are specialist lenders who can help you. These lenders take a more personal approach with their lending criteria. They delve into the reasons for your bad credit, how long ago the issues occurred and how you’ve tried to improve your credit history since then.

Credit issues that affect a buy-to-let mortgage

Various credit issues affect your ability to secure a buy-to-let mortgage and we’ve listed these below.

Late and missed payments

You’ve no doubt been late with a payment once in a while or may have missed one altogether. However, if your credit file shows multiple late payments, particularly if they were recent, this negatively affects your chances of being approved for a buy-to-let mortgage. A specialist lender, though, will delve deeper into the reasons behind the late payments. A late or missed payment on an unsecured account, such as a credit card, telephone bill or personal loan, isn’t considered as much of an issue as one on a secured loan, such as a mortgage.

A low credit score

Lenders use your credit score – which is different from your credit history – as part of the buy-to-let mortgage application criteria. The score is determined by various factors, such as your age, location and income. You may have a low credit score simply because you’ve made multiple credit applications within a short period. Or you may have changed your address frequently. There are various ways to increase your credit score before applying for your buy-to-let mortgage. Speak with one of our specialist bad credit mortgage brokers for advice on how to do this.

Mortgage arrears

When you’re in arrears with a mortgage, it means you’ve missed the payments for more than 1 month. As a mortgage is a secured loan, this is a serious issue from a lender’s point of view. The more recent the arrears and the higher the amount, the more you risk not being approved for a mortgage. Lenders understand that landlords occasionally fall behind with their buy-to-let mortgage payments as there are periods when properties are left unoccupied between tenancies. Therefore, if you fell into arrears a few years ago or you can explain how the arrears occurred and show that you paid them off in a timely manner, the lender will be more willing to approve your application.


If you miss payments for a specific term, such as 3 to 6 months, your arrears become a default. This can be seen on your credit file for 6 years. You can still be approved for a buy-to-let mortgage with a default on your credit file. However, it depends on how many defaults there were, how long ago they occurred, their total value and whether you’ve now repaid them. You may be more limited with what a lender offers you for your bad credit buy-to-let mortgage. For example, you may need to pay a higher deposit and have to pay a higher interest rate.

County Court Judgments (CCJs)

Lenders look at different criteria concerning CCJs when determining whether or not to approve a bad credit buy-to-let mortgage. This includes how many CCJs appear on your credit file, their total value, how long ago they occurred and whether you have now paid off the debts.

Debt management plans (DMPs)

If you’re currently in a debt management plan, you can still secure a bad credit buy-to-let mortgage. Specialist lenders each have their own criteria. However, you can usually have a few late payments, defaults and CCJs with a debt management plan. You’ll more than likely be expected to pay a higher deposit and a higher interest rate.

Individual voluntary arrangement (IVA)

Having an IVA will limit your buy-to-let mortgage options but you can still secure a bad credit mortgage deal. As a severe form of bad credit, your overall financial conduct will be assessed, including confirmation that your repayments are being made on time. You may need to show that you’ve been making consistent payments for 2 years.


Niche bad credit lenders will consider you for a buy-to-let mortgage if you have a discharged bankruptcy. As with other forms of bad credit, your circumstances and the amount of deposit you can pay as well as your financial conduct and the time that’s lapsed since the bankruptcy will be taken into account.


Lenders will consider how long ago your property was repossessed, the circumstances that led to the repossession, your financial conduct since then and the size of your deposit. If your repossessed property in Bexleyheath was a rental investment, they may be more lenient. For example, you may have had difficulty with tenants who simply refused to pay any rent.

Payday loans

Using payday loans tells lenders that you cannot manage your finances adequately. You usually have to pay hefty interest rates on these loans, putting you even further into financial difficulty. Payday loans show up on your credit file and a lender will check how many you’ve taken out. Our mortgage brokers work with specialist lenders who take a more flexible approach when it comes to applying for a buy-to-let mortgage with bad credit. If you’re using a payday loan, they will approach the lender most likely to approve your mortgage application.

Make it easier to get a buy-to-let mortgage with bad credit

There are a number of ways to improve your chances of a successful buy-to-let mortgage application with bad credit. As we mentioned earlier, start working to increase your credit score before you apply. Our mortgage brokers in Kent, London and Edinburgh can guide you on how to do this. Also, the longer you wait to apply after a debt has occurred, the more likely you are to be approved for a mortgage.

You need to be able to show that the rental income will cover at least 125% of the mortgage loan or a higher amount if you’re a higher rate taxpayer. If you have a portfolio of properties, the lender may check the rental income received across the whole portfolio. As well as that, the larger the deposit you can pay, the more competitive buy-to-let mortgage deals you’ll be offered. This is because a bigger deposit lowers the loan-to-value (LTV) ratio, making you less of a risk to the lender. Some lenders check your personal income too and we can approach the right ones if you’re applying for a buy-to-let mortgage as a self-employed landlord or a contractor.

Secure a buy-to-let mortgage with an adverse credit history

Our expert brokers are highly experienced in this field and understand the difficulties faced when applying for a buy-to-let mortgage with bad credit. They will tailor-make your application and approach the specialist lenders most likely to approve your loan. Your affordability, credit issues and circumstances are carefully taken into account to ensure you have a successful outcome.

Whether you’re looking for a new bad credit mortgage for a buy-to-let investment or want to remortgage to a better deal, give us a call on 01322 907 000. Investing in a rental property makes good financial sense when you have credit issues. This is because the rental income you receive helps to boost your finances. When you’re worried about how bad credit affects a buy-to-let mortgage, you can rest assured that our Welling and Pimlico mortgage brokers work hard to present your application in the best light and strive to find the most competitive deal for you.

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