Quick Answer: Can You Get a Buy-to-Let Mortgage with Bad Credit?
Yes! While bad credit can make it harder to get approved, you can still secure a buy-to-let mortgage by improving your credit score, saving for a bigger deposit, and working with a specialist mortgage broker like Mortgage Bridge. Some lenders offer tailored solutions for landlords with bad credit, though interest rates may be higher.
What Is a Buy-to-Let Mortgage and Can You Get One with Bad Credit?
A buy-to-let mortgage is exactly what it sounds like: a loan designed for people who want to buy a property and rent it out. Unlike a standard residential mortgage, lenders look at the potential rental income to decide whether to approve your application.
Most lenders want the rental income to be at least 125-145% of the mortgage payments to make sure you can cover the costs—even if the property sits empty for a while. If you’ve got bad credit, lenders might ask for a bigger deposit or charge higher interest rates. But don’t worry—there are ways around this, and we’ll show you how.
Can You Get a Buy-to-Let Mortgage If You Have Bad Credit?
Yes, you can! A bad credit score doesn’t mean an automatic “no” from lenders, but it does mean they’ll look at a few key things:
- How bad is your credit history? If your issues are minor or a few years old, lenders might be more flexible.
- Are you financially stable now? If your income is solid and your recent financial history looks good, that works in your favour.
- How much deposit do you have? The more you can put down, the less risky you seem to lenders.
- Will the rental income cover the mortgage? If your rental yield is strong, that’s a big plus.
How to Increase Your Chances of Getting a Buy-to-Let Mortgage with Bad Credit?
1. Can You Improve Your Credit Score Before Applying?
Absolutely! It’s always worth working on your credit score before applying for a mortgage. Here’s how:
- Check your credit report and fix any mistakes.
- Pay off outstanding debts where possible.
- Set up direct debits to make sure you never miss a payment.
- Avoid applying for new credit right before your mortgage application.
2. How Much Deposit Will You Need?
For bad credit applicants, lenders often ask for a bigger deposit—usually 25-40% of the property’s value. The more you can put down, the better your chances of approval (and the better your mortgage deal will be!).
3. Is It Worth Using a Mortgage Broker?
In our (totally unbiased) opinion—yes! As a mortgage broker that specialises in bad credit mortgages, we at Mortgage Bridge know exactly which lenders are more flexible and how to structure your application for the best results. Some of the best deals aren’t available directly to borrowers, so using a broker gives you an advantage.
4. Could a Guarantor Help?
If you have a family member with good credit who’s willing to back you, a guarantor mortgage could be an option. This reassures lenders and increases your chances of approval.
5. Does the Property Itself Matter?
Absolutely. Lenders prefer properties in areas with strong rental demand. If your chosen property is in a high-demand area, you’re more likely to get approved.
6. What About Rental Income Projections?
Lenders want to see that your rental income will comfortably cover mortgage payments. Having a professional letting agent estimate potential rental earnings can strengthen your application.
What Else Should You Consider Before Applying?
1. Will You Pay Higher Interest Rates?
Probably, yes. Bad credit often means higher interest rates, so make sure the mortgage is still affordable before committing.
2. Should You Choose Interest-Only or Capital Repayment?
Most buy-to-let mortgages are interest-only, meaning you only pay the interest each month and clear the full balance later (usually by selling or refinancing). Some lenders might require capital repayment mortgages for those with bad credit.
3. Can You Pass the Mortgage Affordability Test?
Lenders stress-test your finances to see if you could still afford the mortgage if interest rates went up. Be prepared to show that your rental income would still cover the payments.
4. What If You Own Multiple Properties?
If you already have a few rental properties, lenders might have stricter rules. They may ask for a business plan and proof that your portfolio is financially stable.
5. What’s Your Exit Strategy?
If you’re taking out an interest-only mortgage, how will you pay off the balance at the end of the term? Selling the property, refinancing, or using savings are all possible options.
FAQs: Common Questions About Bad Credit Buy-to-Let Mortgages
Is it harder to get a buy-to-let mortgage with bad credit than a standard mortgage?
Yes, but it’s not impossible. Lenders assess different factors, including your deposit size and rental income potential.
Which lenders offer buy-to-let mortgages for bad credit borrowers?
Specialist lenders cater to borrowers with bad credit. A mortgage broker like Mortgage Bridge can help you find the right one.
Can I get a buy-to-let mortgage after a CCJ or IVA?
Yes, but expect higher deposit requirements and interest rates. Some lenders are more flexible than others.
Final Thoughts: Can You Get a Buy-to-Let Mortgage with Bad Credit?
Yes, you can! It might take a little extra work, but with the right approach, securing a buy-to-let mortgage—even with bad credit—is totally doable.
Struggling to get a buy-to-let mortgage with bad credit? At Mortgage Bridge, we specialise in helping landlords secure the right deal. Contact us today for expert advice and personalised mortgage solutions!