Is It Possible?
Yes. While mainstream high-street lenders typically require a clean credit history for buy-to-let mortgages, a growing number of specialist lenders specifically serve borrowers with credit issues. These lenders assess each case individually, weighing the severity, age, and context of your credit problems against the strength of the investment.
The key factors in your favour are property equity and rental income. A strong rental yield from a well-located property, combined with a substantial deposit, can convince specialist lenders that the investment is sound despite past credit difficulties.
What Types of Credit Issues Are Accepted?
Specialist BTL lenders will consider a range of adverse credit, including missed payments, defaults, CCJs, IVAs, debt management plans, and even discharged bankruptcy. The further in the past the issue occurred and the smaller the amounts involved, the more lenders will be available to you.
Recent and severe issues — such as an active IVA or undischarged bankruptcy — will significantly limit your options, though some niche lenders may still consider your application. A specialist broker is essential in these situations, as they know exactly which lenders will accept your specific credit profile.
Deposit and Rate Expectations
With adverse credit, you should expect to need a larger deposit than a clean-credit borrower. While 25% is the standard minimum for BTL, specialist bad-credit lenders may require 30% to 40% or more. The additional equity provides the lender with a greater buffer against potential losses.
Interest rates will also be higher, reflecting the additional risk. Rates for adverse credit BTL mortgages typically range from 5% to 9%, compared to 3.5% to 5.5% for mainstream products. While this increases your costs, the rates are still significantly lower than unsecured borrowing alternatives.
Improving Your Chances
Before applying, take steps to present the strongest possible case. Check your credit reports for errors and get them corrected. Ensure you are registered on the electoral roll. If you have any outstanding CCJs or defaults that you can afford to satisfy, paying them off demonstrates good faith to lenders.
Having a strong property — well-located, easy to let, with good rental demand — makes your application more attractive regardless of your credit history. A detailed portfolio plan showing your investment strategy and experience (if applicable) can also help specialist lenders assess your suitability.
Important: Your home may be repossessed if you do not keep up repayments on your mortgage. There will be a fee for mortgage advice. The actual rate available will depend on your circumstances. Think carefully before securing other debts against your home.