Pepper Money Mortgage Criteria: Credit, Deposits and Income Evidence

Pepper Money is a specialist UK mortgage lender that considers applications from people whose circumstances may not meet the standard requirements of many high-street banks. This includes applicants with adverse credit, previous financial difficulties, self-employed income or non-standard employment arrangements.

One of Pepper Money’s distinguishing features is its approach to credit assessment. Rather than relying on an automated credit-score threshold, the lender considers credit history and supporting information through its underwriting process.

Its published criteria also include mortgages for applicants with defaults, County Court Judgments (CCJs), debt management plans and certain previous insolvency arrangements.

This guide explains Pepper Money’s residential mortgage criteria, including deposit requirements, credit history, income assessment and the types of applications the lender may consider.

Pepper Money mortgage criteria: Who Are Pepper Money?

Pepper Money is a specialist mortgage lender offering residential mortgages for first-time buyers, home movers and remortgage customers, alongside products for eligible Shared Ownership and Right to Buy purchases.

The lender’s criteria are designed to accommodate a range of financial and employment circumstances that may be more difficult to assess using conventional mortgage lending requirements.

Examples of circumstances Pepper Money may consider include:

• Applicants with defaults or County Court Judgments.
• People with previous missed credit payments.
• Applicants with active or completed debt management plans.
• People who have previously experienced bankruptcy or an IVA.
• Self-employed applicants with one year’s trading history.
• Contractors receiving day-rate income.
• Applicants with certain variable or additional income sources.
• People who have recently started a new job, subject to the relevant product criteria.

These circumstances do not automatically establish eligibility. Pepper Money assesses applications against its current product, credit, income, affordability and property requirements.

Can You Get a Pepper Money Mortgage With Bad Credit?

Pepper Money is known for its specialist approach to applicants with adverse credit histories.

Its residential mortgage criteria distinguish between different types of credit issues, including defaults, CCJs, secured mortgage arrears, missed unsecured payments and previous insolvency arrangements.

The lender offers different product categories based on the applicant’s credit history and other circumstances.

Mortgages With Defaults

A default is generally recorded when a borrower has failed to maintain payments under a credit agreement and the creditor has formally registered the account as defaulted.

Pepper Money’s published residential criteria state that defaults registered more than six months before the mortgage offer may be considered, subject to review of the application and the applicable product requirements.

Its criteria also include specific treatment of certain smaller defaults.

For example, Pepper Money’s published criteria for its Pepper 24, 18, 12 and 6 products allow up to two individual defaults of £200 or less each to be disregarded for certain classification purposes where they relate to utilities, communications or mail-order providers.

Different rules apply to other product categories, and disregarding a default for product classification does not mean that the lender ignores the applicant’s overall credit history.

Mortgages With County Court Judgments (CCJs)

A County Court Judgment can make obtaining a mortgage more difficult, particularly where it was registered recently or remains outstanding.

Pepper Money publishes criteria that can accommodate certain CCJs registered more than six months before the mortgage offer.

Its specialist residential product information also states that some products have no monetary value limit for CCJs or defaults and do not require them to have been satisfied.

However, this does not mean that any number or combination of credit issues will be accepted.

The dates of registration, relevant product category, other credit history and affordability requirements remain important.

What About Missed Payments?

Pepper Money distinguishes between missed payments on secured borrowing and unsecured credit commitments.

For its published standard residential criteria, mortgage and secured-loan payments generally require a clear recent repayment history, including no missed payments in the previous 12 months.

Unsecured borrowing can be treated differently.

Its criteria indicate that missed payments on certain fixed-term unsecured agreements may be considered after six months, while some more recent issues may fall within its Pepper Flex offering.

Missed payments on revolving credit, such as credit cards, may also be considered under the applicable product requirements.

The treatment of each issue depends on the type of borrowing, the payment history and the current criteria.

Does Pepper Money Use Credit Scoring?

Pepper Money states that it does not rely on an automated credit score to make mortgage lending decisions.

Instead, its underwriters review the applicant’s credit file and supporting information to assess the application against the lender’s requirements.

This can be relevant where an applicant has a lower credit score because of historical financial difficulties.

However, not using an automated credit-score threshold does not mean that credit history is disregarded.

Pepper Money still considers repayment conduct, outstanding commitments, adverse credit events and affordability.

The lender also states that its Decision in Principle process uses a soft credit search, which does not affect the applicant’s credit score.

Does Pepper Money Accept Debt Management Plans?

One of Pepper Money’s notable specialist lending features is its published criteria for applicants with debt management plans (DMPs).

A debt management plan is an arrangement under which a person makes agreed repayments towards qualifying unsecured debts, usually through a DMP provider.

While some mortgage lenders require a DMP to have ended before considering an application, Pepper Money offers selected products for applicants with an active plan.

Can You Get a Mortgage With an Active DMP?

Pepper Money’s published DMP criteria include the following requirements:

• The DMP must have been active for at least 12 months.
• Evidence of satisfactory payments from the DMP provider must be available.
• Only one active DMP is permitted per application.
• An active DMP does not necessarily need to be repaid when the mortgage completes.
• Other credit, affordability and product requirements must still be met.

These provisions apply to selected DMP products rather than every mortgage in Pepper Money’s range.

What About a Completed DMP?

Pepper Money’s standard residential criteria state that debt management plans satisfied more than 12 months ago may be accepted, subject to the remaining lending requirements.

The timing and conduct of the arrangement, along with any other credit issues, remain relevant.

Anyone experiencing debt difficulties can access free, independent support through MoneyHelper’s debt advice locator.

Can Pepper Money Consider Previous Bankruptcy or an IVA?

Pepper Money publishes criteria for applicants who have previously been bankrupt or entered an Individual Voluntary Arrangement.

Its specialist bankruptcy and sequestration range includes circumstances where the applicant was discharged more than three years ago.

The lender’s standard residential range generally requires discharge more than six years ago for the relevant insolvency events.

The applicable waiting period depends on the type of insolvency, product range and individual circumstances.

Previous repossession may also be considered where the repossession occurred more than six years ago, subject to the applicable criteria.

These are published lending parameters rather than guarantees of acceptance.

How Much Deposit Do You Need for a Pepper Money Mortgage?

Pepper Money advertises residential mortgages with borrowing of up to 90% loan-to-value (LTV).

This means that eligible applicants may be able to purchase a property with a deposit of 10%.

For example:

These figures illustrate how a 90% LTV mortgage is calculated. They do not indicate that Pepper Money would approve a particular loan amount. Additional purchase costs and fees are excluded.

Not all applicants or product categories qualify for the maximum advertised LTV.

The deposit required can depend on credit history, the selected product, property type and other lending restrictions.

A larger deposit can reduce the percentage of the property’s value being borrowed, but it does not override the lender’s affordability or credit requirements.

Pepper Money Mortgages for Self-Employed Applicants

Self-employed applicants can face additional mortgage requirements because their income may vary between financial years or because they have a relatively short trading history.

Pepper Money’s published residential criteria include consideration of self-employed applicants who have been trading for at least 12 months.

Can You Get a Pepper Money Mortgage With One Year’s Accounts?

Yes, Pepper Money publishes criteria allowing consideration of applicants with one year’s self-employed trading history, provided its other requirements are satisfied.

Depending on the business structure, the lender may require:

• At least one year’s trading accounts.
• SA302 tax calculations.
• Relevant business bank statements.
• Additional documentation where requested by underwriting.

For sole traders, the lender’s published documentation requirements include at least one year’s SA302 information and the latest month’s business bank statement.

Limited company directors may be required to provide company accounts, tax calculations and business bank statements.

How Does Pepper Money Assess Self-Employed Income?

Pepper Money advertises the ability to consider the most recent year’s self-employed income figures rather than automatically requiring an average across several years.

This may be relevant to applicants whose business income has increased or whose trading history is relatively short.

However, the income must still satisfy the lender’s evidence and sustainability requirements.

The lender will assess the available documentation and wider financial circumstances before determining the income that can be used for affordability.

What About Limited Company Directors?

Pepper Money’s criteria state that directors with a shareholding exceeding 25% are generally assessed as self-employed.

The lender’s income assessment will depend on the company structure, available accounts and relevant supporting evidence.

Different lenders can calculate company director income differently, so a borrowing amount available from one lender should not be assumed to apply to another.

Can Contractors Get a Mortgage With Pepper Money?

Pepper Money’s published criteria include consideration of contractors receiving day-rate income.

The lender states that day-rate contractors must be working under a contract and demonstrate at least 12 months of relevant contracting history.

Its published calculation uses the lower of:

• The average day-rate income over the previous 12 months.
• The current contract day rate multiplied by five working days and 46 working weeks.

For example, a contractor earning £250 per day would have an illustrative annualised figure of £57,500 using five days per week and 46 weeks per year.

However, Pepper Money would use the lower figure where the previous 12-month average produces a smaller amount, and the final affordability assessment remains subject to its requirements.

Does Pepper Money Accept Zero-Hours Contracts?

Pepper Money’s published standard employment criteria include consideration of zero-hours contracts where the applicant has a permanent position, at least two years with the same employer and stable income levels.

The lender will need appropriate evidence of earnings and employment history.

Its criteria also include alternative provisions through Pepper Flex for some applicants whose circumstances fall outside the standard requirements.

Acceptance depends on the relevant product and supporting evidence.

Can You Get a Pepper Money Mortgage in a New Job?

Pepper Money’s standard employment criteria generally require six months of continuous employment, including a minimum period in the current job.

However, the lender also publishes Pepper Flex criteria that can consider certain applicants who have recently started a new job or are within a probationary period.

This does not mean every new-job or probationary application will qualify.

Employment history, contract terms, income evidence and the wider application must satisfy the relevant requirements.

What Is Pepper Flex?

Pepper Flex is part of Pepper Money’s specialist lending offering for certain applicants whose circumstances fall outside its standard residential mortgage criteria.

Published examples of circumstances that may be considered through Pepper Flex include:

• Some recent unsecured missed payments.
• Applicants who have recently started a new job.
• Certain applicants still within a probationary period.
• Some more recent payday loan usage.

Pepper Flex does not remove the need to satisfy affordability, credit and other underwriting requirements.

Some Pepper Flex applications may also involve an additional completion fee, depending on the product and circumstances.

Current product information and fee details should be checked before any mortgage recommendation is made by an adviser acting through an FCA-authorised and regulated network.

Does Pepper Money Offer Shared Ownership Mortgages?

Yes. Pepper Money offers mortgage products for eligible Shared Ownership purchases.

Shared Ownership allows a buyer to purchase a percentage of a property and usually pay rent on the remaining share owned by a housing provider.

Pepper Money publishes specific Shared Ownership mortgage criteria, including restrictions on recent defaults, CCJs and missed payments.

These requirements can differ from the lender’s standard residential mortgage range.

The lender also considers the applicant’s mortgage repayments, rent, service charges and other relevant financial commitments when assessing affordability.

Shared Ownership eligibility, property requirements and the housing provider’s conditions must also be satisfied.

Does Pepper Money Offer Right to Buy Mortgages?

Pepper Money also offers products for eligible Right to Buy purchases.

Its published Right to Buy criteria allow borrowing of up to 100% of the discounted purchase price, including certain fees, subject to a maximum of 75% of the property’s open-market value.

This means that the Right to Buy discount may be relevant to the lender’s deposit calculation, rather than the applicant necessarily providing the same cash deposit required for a conventional purchase.

However, this does not mean that every eligible Right to Buy applicant can obtain a mortgage without contributing their own funds.

Pepper Money’s Right to Buy criteria also contain specific credit-history, property and affordability restrictions.

Does Pepper Money Consider Concessionary Purchases?

Pepper Money publishes criteria for certain concessionary purchases, including qualifying transactions involving close family members and existing landlords.

A concessionary purchase generally involves a property being sold below its open-market value, with the difference potentially forming part of the equity available to the buyer.

Pepper Money’s published criteria include qualifying transactions with borrowing of up to 100% of the purchase price, including fees, subject to a maximum of 85% LTV.

The relationship between the parties, transaction structure, valuation and other lender requirements must be satisfied.

What Income Can Pepper Money Consider?

Alongside standard employment and self-employment income, Pepper Money publishes criteria for certain additional income sources. Each source needs appropriate evidence and must meet the relevant product requirements.

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