Bad Credit Buy to Let Mortgages, Defaults, CCJs and Arrears

What is a bad credit buy to let mortgage?

A bad credit buy to let mortgage is a buy to let loan from a lender whose criteria accept adverse credit, assessed on the property's rent and on the borrower's credit history. Rental affordability works as it does for any buy to let mortgage: the lender tests the expected rent against the mortgage interest at a stressed rate. Banks and building societies do this under the Prudential Regulation Authority's underwriting standards, supervisory statement SS13/16, which the PRA also expects other lenders in their groups to adopt (Bank of England: underwriting standards for buy to let mortgage contracts). Lenders outside those groups set their own tests. Adverse credit leaves the test unchanged but narrows the list of lenders and usually lowers the maximum loan to value, so its effect shows up mostly in the deposit.

Adverse credit buy to let lending covers a landlord whose credit file shows missed payments, defaults, county court judgments (CCJs), an arrangement to pay, a debt management plan, an individual voluntary arrangement (IVA) or a past bankruptcy. Lenders judge buy to let bad credit mainly by the severity and age of each entry. Some mainstream buy to let lenders may accept a satisfied default from four years ago, while recent mortgage arrears on another property usually point to specialist lenders at lower loan to values. For a purchase through a limited company, the lender checks the personal credit of the directors and shareholders behind it.

Most buy to let mortgages are not regulated by the Financial Conduct Authority (FCA), because the loan is taken for the business of letting, with two exceptions. A consumer buy to let mortgage is one not taken out wholly or predominantly for a business, such as a loan on a home someone inherited or used to live in, and it falls under its own regime in Part 3 of the Mortgage Credit Directive Order 2015 (FCA Handbook: PERG 4.10B). Where the borrower is an individual rather than a company, a mortgage on a property that the borrower or a related person, such as a spouse, parent, child or sibling, will live in is a regulated mortgage where at least 40% of the property is used as a dwelling (legislation.gov.uk: Regulated Activities Order, article 61 and article 61A). Our page on regulated buy to let mortgages covers letting to family, and for a home you live in, our CCJ mortgages, mortgages with defaults and IVA mortgages pages cover the residential equivalents.

Mortgage Lane arranges buy to let finance for first-time and portfolio landlords with adverse credit of every kind, buying or remortgaging in their own names or through limited companies. That includes landlords whose adverse credit arose from a past business, a divorce, illness or arrears on a let property. Most of the work is dating every entry on the file, matching it to the lenders whose current criteria accept it and checking that the rent and the deposit meet those lenders' terms. If a lender has already turned you down, our declined mortgages page covers the next steps.

Scotland, Wales and Northern Ireland

The rental test is the same across the UK, but the court records and the purchase taxes differ. Scotland has no county court judgments. The equivalent is a decree from a sheriff court, which Registry Trust registers, and it stays on the credit file for six years from its date unless the court recalls it or it is paid in full within one month (ICO: credit explained). Bankruptcy in Scotland is also called sequestration. The Accountant in Bankruptcy decides applications, and a person is usually discharged after one year (mygov.scot: bankruptcy guide). The nearest Scottish equivalent of an IVA is a protected trust deed, under which payments usually run for four years (mygov.scot: what is a trust deed). Northern Ireland judgments are kept on Registry Trust's Northern Ireland register for six years unless cancelled or set aside (Registry Trust: Northern Ireland judgments). Lenders see all of these through the same credit checks. England and Wales share the CCJ and IVA systems, while Wales and Scotland each have their own purchase tax in place of Stamp Duty Land Tax. The worked example below shows what that does to the cash needed.

Bad credit buy to let mortgage rates

Bad credit buy to let mortgage rates are set by each lender, and specialist lenders usually price them in tiers by the severity and recency of the adverse credit. In the more severe tiers the rate is higher and the maximum loan to value lower. Each lender draws its own lines: how long ago each entry was registered, what kind of account it was on, how large it was and whether it has been satisfied or settled. The same file can sit in a light tier at one lender and a heavier one at another, and a file whose entries are older and satisfied may be priced close to standard buy to let products. Product fees vary in the same way, and they can be higher in the heavier tiers.

On a buy to let the rate sets the monthly payment and, on some products, the rent the lender needs to see. SS13/16 asks banks and building societies to allow for likely rate rises over at least the first five years, having regard to a rise of at least 2 percentage points in buy to let rates, and to assume a rate of no less than 5.5%, unless the rate is fixed for five years or more (Bank of England: SS13/16, paragraphs 2.12 to 2.14). So at a bank or building society, a fix of under five years on a product rate above 3.5% would normally be tested above 5.5%. Where a lender tests a product at its own rate, or at a margin above it, a higher rate in a heavier tier reduces the loan the rent supports. Moving to a lighter tier as the adverse credit ages can therefore improve both the price and the size of the loan. In our experience lenders test the rent at 5.5% on a two-year fix and 4.5% on a five-year fix; the worked example below uses both.

Because a credit file improves as its entries age, the length of the fixed rate is worth choosing with the next remortgage in mind. A shorter fix can end soon after the entries pass the next time band used by the lenders that suit the case. A longer fix gives a certain payment for longer but can carry an early repayment charge if you leave early. Our fixed term mortgages page explains how fixed rates are priced.

Adverse credit and a buy to let plan? Get in touch with your credit reports and the property details. We match the lender to the dates and amounts on the file.

Bad credit buy to let mortgage criteria

Bad credit buy to let mortgage criteria cover the same points on every case, and each lender sets its own limits for them. Three rows rest on published sources, as at October 2026: the rental test and the remortgage row (the PRA's SS13/16, for banks and building societies) and how long entries stay on the credit file (the Information Commissioner's Office). The loan to value, cover ratio and minimum income rows include Mortgage Lane's experience on the cases we arrange. The other rows describe how lenders differ; those limits change often, and the lender's underwriting decides each case. In our experience buy to let lending stops at 85% loan to value even on a clean file, so the adverse credit tiers sit at or below that ceiling (our 85% LTV mortgages page covers the top band).

Landlord experience and personal income can matter as well as the credit file. First-time landlords with adverse credit can have fewer options, because some lenders that accept adverse credit also ask for landlord experience or for the applicant to own their home. In our experience most lenders no longer set a £25,000 minimum personal income, although some lenders still ask for personal income at a level they set. Our page on first time landlord mortgages and our guide to a buy to let mortgage for first-time buyers cover the experience rules, and the buy to let mortgage guide explains how rent, ownership structure and portfolio size affect what a landlord can borrow.

Types of adverse credit on a buy to let, and how each is assessed

Buy to let lenders read every entry on the file for its type, size, age and status, and weigh some types more heavily than others.

Missed and late payments

Lenders look at how recent missed payments are, how many there are and which accounts they were on. Creditors report each account's payment history to the credit reference agencies, and it stays on the file while the account is open and for six years after it closes. Missed payments on a mortgage weigh the most. Buy to let missed payments, on the mortgage of a property you already let, are read especially closely, and lenders can apply their mortgage arrears limits to a buy to let application as they would to a home. More lenders accept older late payments on accounts that are now up to date. Our page on mortgages with missed payments covers how lenders count them.

Get in touch with the dates of the missed payments and the accounts they were on.

Defaults

A default is registered when a lender decides that a credit agreement has broken down, usually after several months of arrears, and it stays on the file for six years from the default date (ICO: credit explained). Paying it marks it satisfied or settled, which does not remove it, but lenders accept satisfied defaults more widely than unpaid ones. For a buy to let with defaults, lenders look at the size, age and status of each one, and they treat a default on a mortgage or a secured loan as more serious than a default on unsecured credit such as a card, a phone contract or a utility bill. Recent defaults narrow the choice to specialist lenders.

Get in touch with the default dates and amounts.

County court judgments

A buy to let with a CCJ is assessed on the number of judgments, their value, their age and whether they have been satisfied. In England and Wales a judgment stays on the register for six years unless the full amount is paid within a month of the judgment date (GOV.UK: CCJs and your credit rating). Paid later, it can be marked satisfied, which stays on the file for the rest of the six years but shows the debt was paid. More lenders accept satisfied and older judgments, while a recent unsatisfied judgment usually needs a specialist lender and a larger deposit. In Scotland the equivalent is a decree, and Northern Ireland has its own register, both described above. Paying a judgment and having it marked satisfied before applying can help, and our CCJ page explains how.

Get in touch with the judgment details.

Debt management plans and IVAs

A debt management plan is an agreement to repay unsecured debts that creditors do not have to accept, arranged directly or through a debt management company (GOV.UK: debt management plans). It is not a court or insolvency process, but the accounts in it can show arrangements to pay, missed payments or defaults on the file, each kept under its own rules. An IVA is a formal arrangement managed by an insolvency practitioner. It is added to the Individual Insolvency Register, which removes it three months after the IVA ends (GOV.UK: individual voluntary arrangements). On the credit file it stays for six years from the date it began, even once completed, or for as long as it lasts if that is longer. A current plan or IVA narrows the choice of lenders sharply. More lenders consider the case once it is completed, and more again as the time since completion grows. In Scotland the nearest equivalent is a protected trust deed, described above. Mortgage Lane does not give debt advice; GOV.UK points to free debt advice through MoneyHelper (GOV.UK: options for dealing with your debts).

Get in touch with the plan details or the IVA completion certificate.

Bankruptcy

Lenders assess a buy to let after bankruptcy by the time since discharge. In England and Wales a bankrupt person is usually discharged automatically after 12 months, and the bankruptcy can stay on the credit file for six years from the date of the bankruptcy (GOV.UK: when bankruptcy ends). Specialist lenders consider applicants once a period has passed since discharge, each setting its own minimum, and the choice widens as time passes and again once the bankruptcy has left the file. For the timeline, the trustee and the home, see our page on mortgages after bankruptcy.

Get in touch with your discharge date.

Limited company purchases

A company set up to hold property, often called a special purpose vehicle or SPV, usually has little or no credit history of its own when it first borrows, so the lender checks the personal credit of each director and significant shareholder. One director's adverse credit can affect the whole application. Lenders draw the shareholder line differently: in our experience some do not underwrite shareholders who are not directors, others underwrite every shareholder, and some disregard holdings under 19%, or 24% and below. Where the company has borrowed or traded before, the lender may also review the company's own record. Buying through a company also means paying the higher rates of Stamp Duty Land Tax on a residential purchase of £40,000 or more in England and Northern Ireland. Our page on SPV mortgage rates covers how limited company buy to let is priced.

Get in touch with each director's credit reports and the company's details.

Remortgaging a let property

A bad credit buy to let remortgage is either a product transfer to a new deal with the existing lender or a switch to a new lender. A product transfer may be available without a new credit assessment, particularly where the borrowing does not increase, but whether the lender rechecks the file is its own policy. The FCA rule that lets a lender skip a new affordability assessment on a like-for-like switch covers regulated mortgages, not business buy to let (FCA Handbook: MCOB 11.6.3R). Switching to a new lender involves the full adverse assessment and may mean specialist pricing. The PRA's affordability expectations do not apply to a buy to let remortgage with no additional borrowing, with the same lender or a different one (Bank of England: SS13/16, paragraph 1.4). A new lender's own credit rules still apply, and raising extra money brings the full assessment back. For residential and portfolio cases, see our pages on remortgage with bad credit and property portfolio remortgage.

Get in touch before your fixed rate ends.

How adverse credit changes a buy to let deal

Adverse credit changes who will lend, how much of the value they will lend and the price, while the rental test works the same way. The table compares a clean file with an adverse one on each part of the deal. A lender with a heavier tier still applies its usual ratio of rent to interest, but if that tier's product is tested at a higher rate, the same rent supports a smaller loan. Fees also vary by tier, so they belong in any comparison alongside the rate.

Of the five, the loan to value usually costs the landlord most, because it sets the bad credit buy to let deposit: each percentage point taken off the limit adds 1% of the price to the deposit. On a £200,000 purchase, a 65% limit in place of 75% needs £20,000 more cash at completion. The price difference between tiers shows up more slowly, in the monthly payment: at 5.2%, the illustrative rate used across our guides and not a product rate, the interest-only payment is £650.00 a month on £150,000 and £563.33 on £130,000. For that reason the worked example below starts with the deposit.

SS13/16 treats a landlord with four or more mortgaged buy to let properties as a portfolio landlord, and banks and building societies then look at the whole portfolio and read the credit file alongside the rent and borrowing across every property. Our page on portfolio mortgages covers that assessment.

How a bad credit buy to let mortgage is arranged

1. Credit reports. Reports from all three main credit reference agencies, Equifax, Experian and TransUnion, since a lender may use any of them; every entry dated, with its amount and status. Each agency provides its statutory credit report free of charge (ICO: credit). Our page on low credit score mortgages explains why the three reports can differ.
2. Tier and lender. Each entry matched to the tiers of the lenders whose criteria accept it, with each lender's loan to value limit, cover ratio and test rate set out side by side.
3. Rent and deposit. The rental test run at the lender's cover ratio and test rate, and the deposit worked out at the tier's loan to value, with stamp duty and costs on top.
4. Application. An agreement in principle and the full application, with the adverse credit disclosed and explained, the lender's valuation of the property and the rent confirmed by the valuer.
5. Offer and completion. The mortgage offer and completion, with a remortgage review set for when the file improves, so the next product can come from a lighter tier.

Same property, three credit files: the arithmetic

Adverse credit mostly changes the cash a landlord needs, because it lowers the maximum loan to value.

Step 1. Loan, deposit and stamp duty on three credit files

An illustrative case, not a product or an offer: a £200,000 buy to let in England, bought in the landlord's own name by someone who already owns their home. Stamp Duty Land Tax at the higher rates for additional properties is £11,500: 5% on the first £125,000 and 7% on the remaining £75,000 (GOV.UK: SDLT on an additional residential property). Suppose the lenders that suit each credit file would lend up to 75%, 75% and 65% of the value. Those limits are examples chosen to show the arithmetic, not any lender's tiers or Mortgage Lane's panel positions, and a lender may set a different limit for any of these files.

With the right lender the older, satisfied default may cost nothing extra, while the recent, unsatisfied judgment costs £20,000 more in deposit for the same property. Satisfying a judgment before applying, or waiting for an entry to age past a lender's time band, can be the cheapest way to bring the deposit down.

Step 2. The same purchase in Wales and Scotland

Stamp Duty Land Tax applies in England and Northern Ireland. Wales has Land Transaction Tax, whose higher residential rates are 5% up to £180,000 and 8.5% from £180,000 to £250,000 (Welsh Government: Land Transaction Tax rates and bands). Scotland has Land and Buildings Transaction Tax, with nothing to pay up to £145,000 and 2% from £145,000 to £250,000 (Revenue Scotland: residential property), plus the Additional Dwelling Supplement of 8% of the whole price on an additional home (Revenue Scotland: Additional Dwelling Supplement). On the same £200,000 purchase that gives:

In Scotland the tax, mostly the supplement, makes the cash needed £5,600 higher than in England for the same loan, and in Wales it is £800 lower. A company pays the higher rates in England and Northern Ireland, and on most residential purchases it pays the higher residential rates of Land Transaction Tax in Wales (Welsh Revenue Authority: higher rates of Land Transaction Tax) and the supplement in Scotland. Mortgage Lane does not give tax advice; HMRC, the Welsh Revenue Authority, Revenue Scotland or a tax adviser can confirm the tax on a particular purchase, and our mortgages in Scotland page covers the supplement in more detail.

Step 3. Does the rent support the loan?

The rent decides whether the lender will lend the full amount the loan to value allows. Suppose the valuer puts the rent at £950 a month, an illustrative figure. The table tests the two loans from Step 1 at the stress rates and interest cover ratios that, in our experience, lenders use: 5.5% on a two-year fix and 4.5% on a five-year fix, with 125% cover for companies and basic-rate taxpayers and 145% for higher-rate taxpayers. SS13/16 notes that 125% is the industry's usual minimum.

On a two-year fix, a higher-rate taxpayer at 145% cover needs £996.88 a month to borrow £150,000, so a £950 rent supports only £142,946. The rent limit is then below the loan to value limit and sets the loan, so the cash needed with stamp duty rises from £61,500 to £68,554. The 65% loan passes every test in the table, and a five-year fix tested at 4.5% supports the full £150,000 at either cover ratio. A bank or building society following SS13/16 may test a two-year fix at a higher rate: 2 percentage points above the illustrative 5.2% is 7.2%, and at 7.2% and 125% cover a £950 rent supports at most £126,666, less than either loan. A lender that tests a heavier tier's product at a higher rate than these lends less on the same rent, which the calculator below shows when you change the stress rate.

What decides the case

Date every entry, satisfy what can be satisfied, and choose the lender whose tier matches the file. Then check that the rent supports the loan at that tier's test rate, because the lower of the loan to value limit and the rent limit sets the loan and therefore the deposit. Our buy to let mortgages page covers the wider market for landlords.