Can You Get a Buy-to-Let Mortgage with Bad Credit? Here’s What You Need to Know
Many people interested in property investment ask whether it is possible to take out a buy-to-let mortgage with bad credit. Because buy-to-let lending is often assessed differently from residential mortgages, there is a common assumption that credit history matters less. In reality, while rental income plays a major role, personal credit history is still an important part of the assessment.
In the UK, getting a buy-to-let mortgage with bad credit can be more challenging, but it is not automatically ruled out. Lender choice is usually narrower, deposits are often higher, and expectations around rates and affordability need to be realistic. This guide explains how buy-to-let lenders assess bad credit, what factors influence acceptance, and what to be aware of before applying.
This article provides general information only and does not offer regulated mortgage advice.
What Counts as Bad Credit in Buy-to-Let Lending?
Bad credit is a broad term and can include a range of issues, such as:
- Missed or late payments
- Defaults
- County Court Judgments (CCJs)
- Debt management plans
- Individual Voluntary Arrangements (IVAs)
- Bankruptcy (historic or discharged)
Buy-to-let lenders do not assess all credit issues equally. The type, severity, frequency, and timing of the issue are all considered.
Does Bad Credit Matter for Buy-to-Let Mortgages?
Yes. While buy-to-let lending focuses heavily on the rental income of the property, lenders still review the applicant’s personal credit history.
Credit checks help lenders assess:
- Financial behaviour and reliability
- How previous credit commitments were managed
- Risk of future arrears
Bad credit does not automatically prevent a buy-to-let mortgage, but it can limit lender options and affect terms.
How Buy-to-Let Mortgage Assessments Work
Buy-to-let mortgages are assessed differently from residential mortgages, but personal finances are still reviewed.
Lenders typically consider:
- Expected rental income
- Property value and type
- Deposit size and loan-to-value (LTV)
- Personal credit history
- Existing property portfolio (if any)
- Age and experience of the landlord
Some lenders also apply a basic personal affordability check, particularly for higher-rate taxpayers or limited companies.
Rental Income Stress Testing
A key part of buy-to-let assessment is rental coverage.
Lenders usually require the rental income to cover the mortgage payment by a certain percentage, often referred to as an interest coverage ratio (ICR). While exact figures vary, lenders apply stress tests to ensure the rent can support the loan even if interest rates rise.
If rental income is strong, some lenders may be more flexible on personal credit history, but this is never guaranteed.
Deposit Requirements with Bad Credit
Deposit size is especially important when applying for a buy-to-let mortgage with bad credit.
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While many standard buy-to-let mortgages require a minimum 25% deposit, applicants with adverse credit may be expected to provide:
- 30% or more, depending on circumstances
A larger deposit reduces lender risk and can significantly improve the chance of being considered by specialist buy-to-let lenders.
Loan-to-Value (LTV) Expectations
Lower LTVs are generally viewed more favourably where bad credit is involved.
For example:
- 75% LTV may be standard for buy-to-let
- 70% LTV or lower may improve options with adverse credit
Higher LTV buy-to-let mortgages are usually less accessible when credit history is impaired.
How Recent Is the Bad Credit?
Recency is one of the most important factors.
- Historic issues (several years old) are often viewed more leniently
- Recent issues, particularly within the last 12–24 months, are assessed more cautiously
Some lenders apply minimum time periods since the last adverse credit event before they will consider an application.
Types of Buy-to-Let Lenders That May Consider Bad Credit
Not all buy-to-let lenders take the same approach.
Specialist Buy-to-Let Lenders
Specialist lenders are more likely to consider adverse credit cases. They often use manual underwriting and assess applications on a case-by-case basis.
Near-Prime Lenders
Near-prime lenders may consider applications where credit issues are minor or historic, provided rental income and deposit size are strong.
Mainstream Lenders
Most mainstream buy-to-let lenders apply strict credit criteria and may decline applications with recent or serious adverse credit.
Personal Income and Affordability
Although buy-to-let lending focuses on rental income, personal income is not irrelevant.
Some lenders assess:
- Minimum personal income thresholds
- Overall financial commitments
- Existing mortgage obligations
Bad credit combined with weak personal finances can further restrict lender options.
Bank Statements and Financial Conduct
Buy-to-let lenders often request bank statements to assess financial behaviour.
They may look for:
- Regular income patterns
- Controlled spending
- Limited reliance on overdrafts
- No recent returned payments
Positive recent conduct can help offset historic credit issues.
Portfolio Landlords and Bad Credit
If you already own multiple buy-to-let properties, lenders may apply additional scrutiny.
They may assess:
- Overall portfolio performance
- Total borrowing exposure
- Rental income across all properties
- Personal credit conduct
Bad credit can have a greater impact where borrowing levels are already high.
Interest Rates and Fees
Buy-to-let mortgages for applicants with bad credit often involve:
- Higher interest rates
- Arrangement or product fees
- Fewer product options
These costs reflect the increased risk from the lender’s perspective. Over time, some landlords aim to remortgage onto more competitive products if their credit profile improves.
Buy-to-Let via a Limited Company
Some landlords purchase buy-to-let properties through limited companies. While company structures are assessed differently, personal credit history of directors is still reviewed.
Bad credit can still affect acceptance, deposit requirements, and pricing, even when buying through a company.
Common Misunderstandings
“Buy-to-Let Ignores Personal Credit”
Personal credit history is still assessed, even where rental income is strong.
“Rental Income Guarantees Approval”
Rental income must meet stress tests, but it does not override serious adverse credit.
“Any Buy-to-Let Lender Will Consider Bad Credit”
Many lenders apply strict criteria and do not accept adverse credit cases.
Preparing Before Applying
People considering a buy-to-let mortgage with bad credit often prepare by:
- Reviewing credit reports in detail
- Allowing time for credit issues to age
- Saving a larger deposit
- Improving recent bank account conduct
- Understanding realistic rental income expectations
Preparation can improve lender confidence, but approval is never guaranteed.
Buy-to-Let vs Residential Lending with Bad Credit
Some people assume buy-to-let is easier than residential lending with bad credit. While the assessment is different, buy-to-let lenders can be just as cautious, particularly where the applicant is inexperienced or credit issues are recent.
Neither route removes the need for careful underwriting.
Taking a Long-Term View
For some applicants, immediate buy-to-let borrowing may not be realistic. Allowing time for credit issues to settle and financial behaviour to stabilise can improve options in the future.
Many landlords build their portfolios gradually rather than all at once.
Summary
So, can you get a buy-to-let mortgage with bad credit? In some cases, yes, but it depends on the type and timing of credit issues, deposit size, rental income, and overall financial profile. Specialist lenders may consider applications where mainstream lenders will not, often with higher deposits and interest rates.
Understanding how buy-to-let lenders assess bad credit and preparing carefully can help applicants approach the process with clearer expectations.
This article provides general information only. For personalised guidance, regulated mortgage advice is required.
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Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.