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Not all services we offer are covered by the FCA
It is difficult to find a mortgage in itself, not to mention when it comes to finding a mortgage with bad credit. Increased rates, fewer choices, and deceptive lender requirements frequently leave borrowers in a state of perplexity about how to start.
The good news? Even with the wrong information and even with the wrong lenders, you would still be able to get a good mortgage, and you would not have to pay more than what you need to.
It is this guide that will deconstruct the bad credit mortgage rates, the way they are calculated, and the manner in which you can save hundreds of pounds on the life of your loan.
When your credit history has bumps — whether it’s a CCJ, default, missed payment, or an IVA — lenders see you as a higher-risk borrower. That risk directly affects the rate you’re offered.
Lenders use risk-based pricing.
The more risk they take, the higher the interest rate. If you’ve had recent financial issues, lenders assume there’s a higher chance of missed payments — so they increase the rate to protect themselves.
Bad credit mortgages can be 1–4% higher than standard rates depending on:
For example, someone with a small default from four years ago may pay only a slight premium. Someone with a recent CCJ may pay noticeably more.
You’re not locked in forever.
Many borrowers only stay on a higher rate for two to three years. Once your credit improves and your mortgage history is clean, you can usually remortgage to a cheaper deal.
High street banks rarely accept applicants with poor credit.
They typically want clean histories and strict affordability records. That’s where specialist lenders step in.
The Role of Specialist Lenders vs. High Street Banks
Specialist lenders don’t just look at your score — they look at the whole picture:
1. Level of Adverse Credit
Mild issues (old missed payments) = lower rates
Severe issues (recent bankruptcy) = higher rates
2. Time Since the Credit Event
Many lenders work in “years since event” brackets:
The longer it has been, the better the rate.
3. Your Deposit Size (LTV)
Lower LTV = lower risk = better rates.
Even increasing your deposit slightly can move you into a cheaper pricing tier.
Specialist lenders use tiered pricing.
Your credit history places you into a “tier,” and each tier has its own interest rate.
Example:
This system ensures that not everyone with “bad credit” pays the same.
Getting a mortgage with bad credit can feel impossible, but these examples show it’s not:
Jane from Manchester
Jane had a CCJ from four years ago. She thought owning a home was impossible. After speaking with a specialist broker and increasing her deposit to 20%, she secured a mortgage and now lives happily in her first home.
Ahmed from London
Ahmed was self-employed with irregular income and a credit card default two years earlier. Traditional banks refused him. With a specialist lender and a 25% deposit, he was approved and now owns a flat in East London.
Sarah and Tom from Birmingham
They had an IVA that ended three years ago. Frida finance after paying off minor debts and applying through a lender that uses tiered credit assessments, they secured a mortgage with a 15% deposit and now have their own home.
Planning, patience, and a bigger deposit can dramatically improve your chances.
Comparing rates isn’t as simple as checking a comparison website. Bad credit mortgages require deeper analysis.
Step 1: Repair and Review Your Credit Report
Before applying:
Even small improvements can drop your rate tier.
Step 2: Calculate Your Max Borrowing and Affordability
Use a “how much can I borrow with bad credit” calculator to get a realistic range.
Specialist lenders may use different affordability rules compared to banks.
Step 3: Speak to an Independent Bad Credit Mortgage Broker
A broker is essential because:
Step 4: Compare True APR vs Initial Fixed Rates
Headlines can be misleading.
A lower initial rate may come with:
Always compare total cost over the fixed period — not just the headline number.
Even small adjustments can move you into a cheaper borrowing tier.
The most impactful way to reduce your rate is to raise your deposit.
Moving from:
Reducing small balances improves:
Some lenders reduce the rate slightly if you choose a longer fix (5–10 years), because it guarantees payment stability.
Different lenders specialise in different credit situations.
Lenders for Minor Issues
Suitable for:
These lenders often offer near-standard rates.
Lenders for Severe Issues
Suitable for:
It’s rare, but not impossible.Most lenders will want at least a 10–15% deposit if there is adverse credit.
If the CCJ is older than 3–6 years and satisfied, your rate could be close to a standard mortgage.
Recent CCJs will result in higher pricing.
Some do. Risk fee charging by special lenders can be higher, although not necessarily.
What is the duration of the application process of a bad credit mortgage?
Lender workload
Bad credit doesn’t mean you have to accept the first offer that comes your way.
With the right comparison, the right deposit, and the right specialist lender, you can secure a fair rate and save hundreds — sometimes thousands of pounds.
Before you apply:
