How to get a first-time buyer mortgage with bad credit
Find out how you can navigate the path to homeownership even if you’re a first-time buyer with bad credit. We’ll dive into some of the key “dos” and “don’ts” along with options for getting a low deposit mortgage.
Getting your foot on the property ladder as a first-time buyer is a major milestone, but if your credit history is less-than-perfect and/or you’ve got a low deposit, you might be wondering how realistic your chances of success are.
Luckily, these days there are several specialist mortgage lenders who can cater to first-time buyers with bad credit – such as Aldermore, Kensington, Bluestone, Pepper Money, Together, and more. Better still, you can get free support online to find a lender that can help you.
Getting a first-time buyer mortgage with bad credit
Not every specialist bad credit lender will be suited to each type of adverse credit, so it’s crucial you approach the right lender for your circumstances.
So in most cases, this means using a reliable mortgage broker service like Habito who has the ability to introduce you to the most appropriate lender, ensuring you’re on the right path and giving yourself the best chance of success. Habito can scour the whole market to find you the best rate you’re eligible for, and can guide you through the whole process.
Your bad credit mortgage checklist: Dos and don’ts
Much like avoiding common first-time buyer mortgage mistakes, preparing for an application if you’ve got bad credit requires a strategic approach.
Use this checklist to ensure you’re presenting the best possible version of your finances to a lender and avoid any unnecessary rejections.
1. Do get visibility of your credit report
Lenders will look at your financial past with a magnifying glass; you should do the same first. You don’t have to pay for this.
Most people don’t realise it, but there are actually 3 main credit reference agencies in the UK (Experian, Equifax, TransUnion), and you should check all your reports for mistakes, areas to improve, or to see what’s holding you back.
The action: Sign up and check your credit reports from Experian, Equifax, and TransUnion to see exactly what lenders see.
Why it matters: Sometimes, “bad credit” is actually just “wrong credit” – errors on your report (like an old address or a settled debt), which can be disputed and removed, instantly boosting your profile. It may also be worth getting an expert mortgage advisor to review your file.
2. Do seek advice from a specialist broker
As a first-time buyer with bad credit, going directly to your bank to apply for a mortgage is likely setting yourself up for failure. It’s well worth seeking expert advice from a broker before making an application.
The action: Use a “whole-of-market” broker like Habito, Mojo Mortgages, or L&C Mortgages. Several brokers, including Habito, are fee-free because they make their money from the mortgage providers.
Why it matters: Specialist lenders often only accept applications through brokers. An experienced broker will know exactly which bad credit lenders would be more willing to accept your specific type and age of adverse credit, saving you from potential rejections that could further damage your score.
3. Do explore government-backed schemes
If you have a poor credit score paired with a low deposit, there are low deposit schemes for first-time buyers and government incentives that can really help you get a leg up with your application. Once again, your mortgage adviser/broker can do do this for you.
The action: Look into Shared Ownership, the Mortgage Guarantee Scheme, and lifetime ISAs (LISAs).
Why it matters: These schemes can lower the barrier to entry, sometimes allowing for smaller deposits (Shared Ownership), a 5% deposit paid for first-time buyers (Mortgage Guarantee Scheme), or a 25% boost on your savings (LISA). While credit checks still apply, some lenders are more flexible towards applicants when the loan is supported by a government initiative.
4. Don’t borrow excessively before your application
Your “debt-to-income” ratio can also play an important role in a lender’s decision. While there’s nothing you can do about historical bad credit, don’t put yourself in a worse position by additional borrowing or taking out new lines of credit just before or during your mortgage application.
The action: Treat your credit as frozen for at least 6 months before applying. No new car finance, no new Buy Now, Pay Later (BNPL) schemes, and no maxing out credit cards.
Why it matters: New debt suggests financial instability to lenders. Keeping your balances low shows you are in control of your outgoings.
5. Don’t bury your head in the sand
You may think that all this sounds like too much effort and you might as well just “try your luck”. Unfortunately, lenders go through everything with a fine-tooth comb, and it’s much better to be proactive than reactive.
Doing nothing and hoping for the best will likely torpedo any realistic chances you have of getting a first-time buyer mortgage with bad credit.
The action: See what steps you can take yourself, but some areas will be likely out of your control; and so the best option will be to get advice from a specialist mortgage broker who can greatly improve your likelihood of securing a mortgage.
Why it matters: Understanding each lender’s approach to bad credit can be complex and confusing, but if deciphering all the lending criteria isn’t appealing, using a broker is a proven shortcut to help you find the right lender.
What UK banks and building societies say about bad credit
High street lenders. These are your mainstream lending options like banks where the lending criteria is strict, approval processes may be automated, and they tend to lean towards risk-averse (sometimes entirely avoiding first-time buyers with bad credit).
Specialist lenders. These may not be names you’re familiar with and they may not have branches for you to pop into for a chat. They tend to use manual underwriting and can be much more flexible when it comes to first-time buyer mortgages with bad credit.
Example specialist approach: Aldermore
Aldermore is a self-proclaimed “complex credit” specialist. Their philosophy is that a previous financial hiccup shouldn’t automatically disqualify you from homeownership. They are known for considering applicants on Debt Management Plans (DMPs) or those with previous CCJs and missed loan payments.
However, their flexibility comes with specific tiers based on the recency of your credit issues:
Tier 1 (strictest requirements with highest borrowing power). If you’ve got a low deposit and want to get a 95% LTV mortgage (5% deposit), you must have had no CCJs, defaults, or mortgage arrears in the last 36 months.
Tier 2 and 3 (more flexible requirements with lower borrowing power). These tiers are more lenient about your past; they’ll consider you even if you’ve had CCJs or defaults as recently as 6 months ago. However, because the perceived risk is higher, they restrict how much you can borrow, so you may have a maximum LTV of 75% or 80%, meaning you’d need a deposit of 20% to 25%.
Example high street approach: HSBC
In contrast, big banks like HSBC generally prefer “clean” applications. The lending criteria states that it will automatically reject an applicant who:
Within the last 2 years has owed overdue payments, in an amount equivalent to 3 months’ payments, on a mortgage or other loan (whether secured or unsecured).
Has had one or more county court judgments (CCJs), with a total value greater than £500, within the last 3 years.
Has been subject to an individual voluntary arrangement (IVA) or bankruptcy order which was in force at any time within the last 3 years.
It also states that for light adverse credit:
Applicants who have previously missed payments on their credit commitments will usually be declined. Individual cases may be considered under exceptional circumstances.
This implies that missed payments are the exception rather than the rule. If you have a recent bankruptcy or multiple CCJs, a high-street bank or mainstream lender like HSBC is highly likely to decline the application automatically due to their rigid scoring criteria for applications.
So as you can see, different mortgage providers have quite different policies. But you don’t have to go researching them all – a decent broker like Habito (with both high-street and specialist lenders in their panel) can do that for you, without you incurring a fee.
Bottom line
Finder statistics reveal that the average first-time buyer deposit in the UK is £61,090, approximately 20% of the average house price for a first-time buyer, which is £311,034. If you’ve got bad credit, you may find you need a deposit around this size – depending on the age and severity of your credit issues (and the lender you approach).
For those of you who happen to have bad credit and a low deposit, it can still be possible to get a mortgage, particularly if your issue is related to something less serious like a missed payment or a low credit score – but your pool of lenders will be smaller.
Navigating the bad credit lending landscape without expert support can be a nightmare. So we’d encourage you to have a discussion with a mortgage broker or advisor platform to see where you stand and what the best next steps are for you to get a first-time buyer mortgage with bad credit.
Frequently asked questions
Can a first-time buyer get a mortgage with no deposit?
It can be possible, but there are only a small number of options out there. For example, Skipton Building Society offers a “Track Record Mortgage” aimed at people currently renting where no deposit for first-time buyers is required. However, there are specific qualifying criteria to meet. Another option is April’s “No Deposit” mortgage.
However, Skipton specifies that you have no missed payments on debts or credit commitments in the last 6 months and April’s criteria states you must have a clean credit history. So, you can’t have bad credit and get a no deposit mortgage.
Can you get a UK mortgage with bad credit, missed payments, or defaults?
Absolutely. While high-street banks might be quick to say no, having a less-than-perfect credit history doesn’t automatically lock you out of the market.
Many lenders are willing to look past older minor bad credit issues, especially if you can show a recent track record of improved financial behavior.
The key is to find bad credit specialist lenders who use manual underwriting over automated algorithms. Working with a whole-of-market broker such as Habito is the easiest way to narrow down your best lending options.
Which mortgage broker should you use if you have credit issues?
If your financial history is complex, you need a broker that looks beyond the standard mainstream lenders and high street banks. You should look for a whole-of-market broker like Habito or L&C Mortgages that has access to both mainstream and specialist lenders (like Aldermore or Pepper Money).
Many mortgage broker platforms offer free online advice and a digital-first approach, so you can explore your eligibility in a low-pressure environment without the fear of an unnecessary decline on your record.
What is the easiest way for a first-time buyer to secure a mortgage?
Preparation is the best shortcut. The easiest route is to use a broker that simplifies complex criteria and handles the heavy lifting for you. A digital broker can help you calculate your affordability, explain those confusing lender requirements, and manage the entire application process from your phone.
Can a broker help first-time buyers find a low-deposit mortgage?
Yes. Whether you’ve saved a 5% deposit or have more put away, an experienced mortgage broker service can help match you with the right lender because these experts can quickly identify which lender is currently offering the most competitive low-deposit deals for your specific financial profile.
Can I get a mortgage with a CCJ?
Yes, but the age of the CCJ is the most important factor. If the CCJ was registered over 3 years ago and has been satisfied (paid off), you may still qualify for competitive rates with some lenders. If it happened in the last 12 months, you’ll likely need a specialist lender and a larger deposit.
Will a bad credit mortgage cost more?
Generally, yes. Lenders view bad credit as a higher risk, which they offset by charging higher interest rates and sometimes higher arrangement fees.
However, one strategy borrowers use is to go for a 2-year fixed rate, use that time to rebuild their credit or wait for adverse issues to age, and then remortgage onto a cheaper rate once their credit profile has improved.
How much deposit do I need if I have bad credit?
While 5% deposit (95% LTV) mortgages exist for those with minor credit issues (like a single missed payment), most specialist lenders will ask for a deposit of at least 10% to 15%. The worse and more recent your credit issues are, the higher the deposit lenders will likely want.
How long does bad credit stay on my file?
Most adverse credit issues stay on your credit file for six years. The good news is that their impact fades over time. For example, a default from 5 years ago is much less damaging than one from 5 months ago.
How do I know which mortgage lenders will accept me?
There’s no surefire way of knowing until you submit your application. It’s recommended that you seek guidance from a mortgage advisor, who will have the knowledge to point you towards the lenders most likely to approve your application.
George is a deputy editor at Finder. He has previously written for The Motley Fool UK, Nasdaq, Freetrade, Investing in the Web, MoneyMagpie, Online Mortgage Advisor, Wealth, and Compare Forex Brokers.
He's focused on making personal finance and investing engaging for everyone. To do this he draws from previous work and his Level 4 Diploma for Financial Advisers (DipFA), sharing what he’s learnt. When he’s not geeking out about money, you’ll find him playing sports and staying active.
See full bio
George's expertise
George
has written
282
Finder guides across topics including:
Want to know how to choose the right mortgage as a first-time buyer? Our guide will give you everything you need to know to find the help and advice you need.
Finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which Finder receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. Finder compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
How likely would you be to recommend Finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
