Getting a Buy to Let Mortgage with Bad Credit: Clear Guidance & Real Options
Many aspiring landlords worry that a poor credit history will stop them investing in rental property, but the buy-to-let market can be more flexible than the residential one. Bad credit does not automatically block you from securing a mortgage, although lender choice and deposit requirements may differ. Understanding how lenders assess risk helps you prepare effectively and identify realistic borrowing options.
This guide explains how to get a buy to let mortgage with bad credit, which lenders may still consider your application, and the practical steps that can help strengthen your profile. This article provides general information only and does not offer regulated mortgage advice.
What Counts as Bad Credit for Buy to Let?
Lenders treat the following as adverse credit:
- Missed or late payments
- High credit utilisation
- Defaults
- CCJs
- Payday loans
- Debt management plans
- IVA or bankruptcy
- Repossessions
- Returned direct debits
- Overdraft misuse
Each type affects your options differently depending on severity, recency, and whether it has been settled.
Can You Get a Buy to Let Mortgage with Bad Credit?
Yes — many specialist lenders accept applicants with adverse credit, including more serious issues such as multiple defaults or CCJs. Buy-to-let affordability is mostly based on rental income, so lenders may be more open-minded than in the residential market.
Your chances depend on:
- The age of the adverse credit
- Whether the issue is settled
- Your deposit size
- Rental income strength
- Your bank statement conduct
- Property type and location
The Importance of Recency: When Bad Credit Matters Most
Within the last 6–12 months
Most restrictive. Lenders will want evidence of improved conduct.
1–3 years old
More lenders become available, especially if credit has been stable since.
3–6 years old
Often acceptable to many buy-to-let lenders, even mainstream options in some cases.
6+ years old
Typically no longer visible on credit files and less impactful.
How Different Credit Issues Affect Your Buy to Let Options
1. Late or Missed Payments
Minor issues and older late payments are often acceptable, especially if the rental income is strong.
2. High Credit Utilisation
Seen as a sign of financial strain, but may be overlooked by specialist lenders if bank statement conduct is stable.
3. Defaults
Defaults affect mainstream lenders, but specialist buy-to-let providers may accept:
- Settled defaults
- Multiple defaults over 3–4 years old
- Smaller defaults with clear explanations
4. CCJs
Key factors include:
- Whether the CCJ is settled
- How old it is
- The total value
- Number of CCJs recorded
Settled CCJs older than two years are commonly accepted by specialist lenders.
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5. Payday Loans
Recent payday loans are seen as high risk.
Loans over 12 months old may be less of an issue.
6. IVA, DRO or Bankruptcy
Possible through specialist lenders if:
- Sufficient time has passed since discharge
- Deposit is strong (30–40%+ may be required)
7. Debt Management Plans
Some lenders accept applicants currently in or recently exiting a DMP, depending on stability and rental performance.
Why Deposit Size Matters So Much
Deposit size is often the most important tool for applicants with bad credit. It directly reduces lender risk.
| Deposit Size | Likely Outcome |
|---|---|
| 20% | Limited options, mostly for lighter adverse cases |
| 25% | Industry standard; some lenders available for moderate adverse credit |
| 30% | More specialist lenders available |
| 35–40% | Options for applicants with more serious or recent adverse history |
A higher deposit can offset concerns around credit.
How Rental Income Supports Your Application
Buy-to-let affordability is based on the Interest Coverage Ratio (ICR) and rental stress tests.
Typical requirements:
- 125%–145% ICR for limited companies
- 140%–170% ICR for individuals
A property with strong rental yield may compensate for weaker credit, because lenders view it as a safer investment.
A valuer will confirm the achievable rent, and this figure forms the basis of the lender’s calculations.
Buy to Let Mortgage in a Limited Company with Bad Credit
Some landlords choose a limited company (SPV) structure because:
- Rental stress tests may be more favourable
- Specialist lenders in this space often work with more complex credit profiles
However, lenders still review the directors’ personal credit files, and personal guarantees are usually required.
Limited company structures also involve accountancy and tax considerations, so professional tax advice is recommended.
Personal Name Buy to Let with Bad Credit
Borrowing in personal name is possible but may limit lender choice. You may face:
- Stricter rental stress tests
- Higher deposit requirements
- More manual underwriting
Nonetheless, many lenders still consider adverse credit cases where rental income and personal finances show stability.
Property Types That Influence Lender Flexibility
Standard single-unit BTL properties usually provide the most lender choice.
Lenders may be more cautious with:
- HMOs (Houses in Multiple Occupation)
- Multi-unit blocks
- New-build flats
- Flats above commercial premises
- Holiday lets
Applicants with bad credit may benefit from starting with a straightforward property type.
How Bank Statement Conduct Affects Approval
Even if your credit history includes adverse events, lenders want to see:
- No unarranged overdrafts
- No returned payments
- Stable income flow
- Controlled spending patterns
- Improved financial behaviour
Recent good conduct can significantly strengthen a weak credit profile.
Common Bad Credit Scenarios and Likely Outcomes
Scenario 1: A default from four years ago, now settled
Usually acceptable at 25% deposit.
Scenario 2: Several late payments last year
Possible with specialist lenders, especially if credit behaviour has improved.
Scenario 3: A CCJ from two years ago, recently settled
Often needs a 30–35% deposit.
Scenario 4: Bankruptcy discharged three years ago
Possible only with specific lenders and a higher deposit.
Scenario 5: High credit utilisation but no missed payments
Often acceptable depending on bank conduct.
How to Strengthen Your Buy to Let Application with Bad Credit
(General Information Only)
1. Improve recent payment behaviour
Lenders heavily focus on the last 6–12 months.
2. Reduce credit balances
Lower utilisation improves your profile quickly.
3. Avoid new credit applications
Multiple hard searches weaken affordability.
4. Prepare a clear explanation
Many lenders accept adverse credit if there is a reasonable cause backed by evidence.
5. Increase your deposit
One of the most effective ways to unlock more lender options.
6. Demonstrate strong rental potential
High rental yield strengthens your overall case.
7. Keep bank statements clean
Avoid overdrafts, returned payments or large unverified transactions.
Summary
Getting a buy to let mortgage with bad credit is entirely possible, but the route depends on:
- The type of adverse credit
- How recent it is
- Deposit size
- Rental income strength
- Property type
- Bank statement conduct
Specialist lenders offer real solutions for applicants with imperfect credit histories, and many landlords successfully secure buy-to-let mortgages even with past financial difficulties.
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.