Getting a buy-to-let (BTL) mortgage with bad credit is possible with the help of specialist lenders that assess applications using human underwriting rather than relying only on automated credit scoring.
A few key details make a big difference between an offer and a refusal.
Specialist lenders may consider county court judgments (CCJs), defaults and other historic financial issues. Underwriters will look at how serious the problems were, when they happened and whether any debts or late payments remain outstanding.
Don't go for maximum borrowing; the lender will expect you to shoulder a degree of risk, often through a deposit of at least 25% to 30%.
Trading status makes a difference, too. Adverse credit lenders tailor products to borrowers, so individual and limited-company applications are assessed differently. Limited-company applications are also subject to the lender's criteria for the company and its directors.
Buy-to-let lenders who consider adverse credit
Most high-street banks are less likely to accept applications from individuals or companies with significant adverse credit. Specialist lenders may place more weight on the property's rental yield and the age and severity of the credit problems.
Here are some specialist lenders with buy-to-let ranges that may consider applicants with adverse or complex credit, subject to their current criteria:
| Lender |
Typical Credit Options |
Key Features |
| Together Personal Finance |
Considers some CCJs, defaults and recent unsecured arrears. |
Offers interest-only options and buy-to-let lending up to 75% loan to value (LTV). |
| Precise Mortgages |
Offers specialist products for borrowers with adverse credit histories. |
Buy-to-let products are available through mortgage intermediaries. |
| Foundation Home Loans |
Uses product tiers for different borrower and credit profiles. |
Caters for individuals, limited companies, portfolio landlords and complex property types. |
| Kensington Mortgages |
Assesses adverse credit and complex credit backgrounds under its published criteria. |
Offers buy-to-let ranges for first-time landlords, portfolio landlords and limited companies. |
| Vida Homeloans |
Uses buy-to-let product tiers based on varying levels of adverse credit. |
Offers specialist criteria for individual and limited-company borrowers. |
How adverse credit lenders assess applications
- Age of credit problems: A CCJ or default registered over 24 to 36 months ago is generally treated more leniently than one from the last 12 months.
- Rental coverage: Lenders commonly require potential rental income to cover 125% to 145% of the mortgage interest payment.
- Deposits: While standard BTL mortgages often require a 20% to 25% deposit, adverse credit BTL products may require 25% to 30%.
- Accessing a lender: Many specialist lenders do not accept direct applications from consumers; they operate through mortgage brokers.
Don't forget that adverse credit BTL mortgages generally come with higher interest rates and arrangement fees than standard mortgages.
