What we cover in this guide
- How do I get a Buy-to-Let mortgage with bad credit?
- Read our Buy-to-Let guide
- Try our Buy-to-Let mortgage calculator
- I have bad credit – What deposit do I need for a Buy-to-Let property?
- What types of bad credit issues do lenders accept for a Buy-to-Let mortgage?
- Buy-to-Let mortgage rates if I have bad credit
- Bad credit Buy-to-Let mortgage lenders
- Frequently asked questions
How do I get a Buy-to-Let mortgage with bad credit?
In recent years Buy-to-Let mortgages have become increasingly popular. This means that there are more applicants with bad credit. A range of specialist lenders have entered the sector offering products to those rejected by mainstream lenders. This makes it easier to obtain a bad credit Buy-to-Let mortgage in the current market.
The nature of the mortgage and your circumstances will mean that you will need to work with a mortgage broker. This is because many of these specialist lenders don’t advertise their services, so to access them you will need to use a broker.
A specialist broker will look at your circumstances, run affordability assessments that mirror lenders, and enquire for you. Then, when the time comes, they will help you frame your application in the best light so that it stands the greatest chance of success.
When applying for a Buy-to-Let mortgage, it’s very important to have prepared your anticipated budgets. This will need to be based on real figures for costs and income as much as possible and projections for the next few years. Furthermore, it should allow for times when the property may lie empty.
Buy-to-Let mortgage with defaults
Having a default notice to your name will cause a lender to pause for thought when considering your application. Resolving the matter quickly and getting the entry on your credit record amended and have a positive effect, increasing you chances of being accepted.
If you have one or more defaults unresolved, or you’re still working through a payment plan, your options will be even more limited.
Not all defaults occur because of poor money management. You may have unexpectedly lost your job or become very ill and lost your income. Specialist lenders understand this and may take a wider view, assessing your induvial circumstances, rather than just seeing a default on your record and shying away.
Lenders will consider the number of defaults, the amount of time that has passed and the amount of money involved. A string of defaults in the last twelve months will have a lot more impact than a single case three years ago. This is especially true if you have kept a clean file since.
Buy-to-Let mortgage with CCJs
Having a CCJ on your credit record will have a strong negative impact on your chances of getting any kind of mortgage. Settling the debt and getting it removed is the best starting point before applying.
Having a CCJ still on your file will present a problem to many lenders, especially if it has not been settled. However, you may be able to obtain a mortgage from one of the many specialist mortgage lenders on the market. They will take a wider view of your circumstances and place more weight on your current financial situation.
Buy-to-Let mortgage with a Debt Management Plan
While having a DMP shows lenders you’re willing to take responsibility for your debts, it will still have a negative effect.
Having a DMP against your name can cause a problem with many Buy-to-Let mortgage providers, reducing the number of lending options open to you. However, there are a number of specialist lenders who will be willing to help you.
You may need to pay a higher deposit, but you should be able to get a loan if the DMP was served at least three to six years ago. Keeping a clean record since the DMP will also improve your chances.
If you are currently in a DMP, then this could be a major issue for your chances of being accepted. This is not only because it affects your credit history, but it can also make saving up for a deposit difficult.
Buy-to-Let Mortgage after an IVA
Having an IVA on your file will certainly affect a lender’s view of your application, although it will not preclude it altogether.
If you have settled your IVA and have no other credit issues, there’s no reason why you shouldn’t apply.
An IVA’s presence on your credit record will pose a problem for high street lenders, but, there are a number of specialist lenders who will consider you. These lenders have far more flexible assessment criteria for mortgage applicants and will take your wider circumstances into consideration. As ever, if you have kept a clean record since then your chances of success will have improved.
Frequently Asked Questions
- Can I remortgage my Buy-to-Let property if I have poor credit?
- Why should I remortgage my Buy-to-Let property if I have bad credit?
It is indeed possible to remortgage a Buy-to-Let with bad credit.
However, you may need to jump through a few more hoops than most and go the extra mile to prove your creditworthiness. For more on Buy-to-Let remortgages, read our in-depth guide.
Whatever the nature of your bad credit issue, you may wish to remortgage for a number of reasons:
- Your property is now free from any remaining mortgage debt, or any other loans secured by it. By remortgaging it you will raise capital to fund an additional property purchase.
- Your mortgage deal is ending soon and the rate will go up to the standard basic rate. You want to remortgage to find a similar product with a more favourable rate.
- You are reaching the end of your current deal as above and the interest rate is about to increase, so you are looking to free up some equity in the property.
The level of equity you have in the property will have a great influence over a lender’s decision, so the more investment you can show, the greater the level of security will be to the lender.