Finding a home loan with past credit problems can feel like a maze. Bad credit mortgages still exist, but the UK’s 2025 lending rules make the path narrower. If your credit score or credit history is weak, you will face extra checks and higher costs.
This guide explains what changed, how affordability tests work, and why deposits matter more now. You will also see simple steps that lift your chances with mortgage brokers and specialist mortgage providers. Some doors stay open, so learn how to reach them with a clear plan.
Key Takeaways
- From 2025, lenders run tougher affordability checks and often ask for larger deposits, sometimes 20 percent or more, for bad credit mortgages.
- If interest rates move from 2 percent to 6 percent on a £100,000 loan over twenty years, the monthly payment rises from £506 to £660.
- Working with specialist mortgage brokers such as Revolution Finance Brokers can improve approval odds after past credit issues.
- Raising your credit score by paying on time and fixing errors on your credit report now matters more under the new rules.
- Bad credit mortgages tend to carry higher fees and repayments, plus a greater risk of repossession if payments are missed.
What Are Bad Credit Mortgages?
Bad credit mortgages, sometimes called adverse credit or sub-prime mortgages, are loans for people with a poor credit record. A credit record is your payment history. Terms you may see include CCJs, which are County Court Judgments, defaults, IVAs, which are Individual Voluntary Arrangements, and bankruptcy. These show past problems paying debts.
Specialist mortgage providers assess cases that high street banks may refuse. They often accept missed repayments or older county court judgments in your credit histories. The trade-off is cost. Interest rates are usually higher than a standard variable rate, and many lenders ask for a bigger deposit, often 10 to 20 percent instead of 5 percent.
Higher rates plus fees can stretch a budget. APRC, the Annual Percentage Rate of Charge, shows the total yearly cost of the loan. Most borrowers apply through a mortgage broker or trusted mortgage advisors. Firms like Revolution Finance Brokers can help match you with a suitable lender and explain loan to value limits. Loan to value, or LTV, is the loan size divided by the property value.
Overview of the New UK Lending Rules in 2025
The 2025 rules push lenders to look deeper at income and spending. Banks and building societies now test if you can afford the loan today and if rates rise later. They will review credit cards, overdraft use, car finance, and other unsecured debts to see your true outgoings.
Deposits now play a bigger role. A higher deposit lowers the lender’s risk. It also cuts the LTV, which can unlock better fixed-rate mortgages. Rate changes hit hard. On £100,000 over twenty years, a move from 2 percent to 6 percent lifts the monthly bill from £506 to £660. A basic mortgage calculator shows this jump clearly, which is why planning before you apply matters.
How the New Rules Impact Borrowers with Bad Credit
The new tests add friction for borrowers with black marks on file. Applications for home mortgages, and shared ownership mortgage with adverse credit, now face close checks and stricter limits.
Stricter affordability checks
Lenders now model your budget under stress. They look at wages, bills, and debts, then check how payments would look at higher interest rates. For instance, a £100,000 loan over twenty years costs £506 at 2 percent; at 6 percent, it becomes £660 a month. People with existing mortgage debt or a protected trust deed may face extra questions or evidence requests.
Mortgage brokers often ask you to set out your monthly budget before they submit any case. That includes fixed costs, savings, and room for rate rises. Both fixed rate and conventional mortgage products are tested this way. “If repayments look risky during their credit checks,” says TransUnion UK analyst Lee Kendrick, “lenders may decline the application.” Applications for Shared Ownership Mortgage with Adverse Credit also get tighter scrutiny.
Changes to deposit requirements
For many with past arrears or defaulting on old loans, the deposit bar is higher. Some specialist lenders now want 20 percent or more of the property value. The reason is simple, a larger deposit reduces the LTV, which lowers risk.
Revolution Finance Brokers set their own limits. If your LTV is above 80 percent, they may ask for even more money up front. A bigger deposit can sometimes secure a lower fixed rate mortgage. It may also speed up approval. That said, saving more takes time, so check current criteria across lenders, including any impact on Right to Buy or buy to let cases.
Tips to Improve Your Chances of Getting a Mortgage
Small, steady steps can lift your credit profile and your confidence. The aim is to show reliable habits and stable finances, so a lender sees less risk.
Build and improve your credit score
Pay every bill on time. On-time payments on a phone contract, a utility, or a small credit card build trust fast. Use a credit card for small spends and clear the balance in full each month. This shows control, not pressure.
Open and keep a simple bank account in good order. Get on the electoral roll so lenders can confirm your address. Check your credit report for errors and fix them quickly. Free debt advice groups like Step Change or Foundation for Credit Counselling can help if you spot issues or need a plan.
These habits lift credit scores over months, not days. That patience pays off with the tougher 2025 checks.
Work with specialist mortgage lenders
Specialist lenders use human underwriters, not just automated rules. They can consider self-employment, uneven income, or past missed payments. Some will accept a guarantor loan, where a family member agrees to cover payments if you cannot.
Experienced bad credit brokers such as Revolution Finance Brokers can compare options and explain choices in plain English. Their advisers provide tools like a Bad Credit Mortgage Calculator. You do not need cookies enabled on your web browser or an Instagram account to use it. Revolution Finance Brokers works under HL Partnership Limited, which is authorised by the FCA, giving an extra layer of protection for advice, valuation, or refinance work.
Popular Bad Credit Mortgage Lenders in the UK
Several UK lenders focus on real-life cases with past blips. They aim to balance risk with a fair view of your story.
- Revolution Finance Brokers uses flexible criteria and reviews complex credit histories. Past issues do not always block access.
- Bluestone Mortgages assesses each application by hand, not just the score. Missed payments can be considered.
- Vida Homeloans looks at behaviour and patterns, not only numbers. This can help if your record is messy.
- Kensington Mortgages relies on expert underwriters for tough cases and won the 2020 What Mortgage Awards for Best Specialist Lender.
- MBS Lending considers different reasons for credit problems and will look at a wide range of cases.
Guarantor loans can help if your own score is very low or you need support from a relative. Noscript browser settings might be needed to view details on some lender sites.
Benefits and Risks of Bad Credit Mortgages
Bad credit mortgages can help you buy sooner and rebuild a track record. Paying on time for twelve months or more can improve your credit score. Over time, you may qualify to remortgage to a lower rate with mainstream mortgage lenders.
There are clear risks. Rates and APRC are usually higher, and set-up fees can add up. If payments are missed, your home could be repossessed. Remortgaging may be harder under the 2025 rules, as lenders go deeper on income and debts. If interest rates rise, monthly costs can climb quickly, so leave room in your budget.
Conclusion
The 2025 rules make approval tougher, but not impossible. With stronger budgeting, a higher deposit, and help from skilled mortgage brokers, you can still find a path. Focus on your credit score, tidy your spending, and choose lenders that match your profile for bad credit mortgages.
Use a simple mortgage calculator to test payments at higher interest rates. That one step prevents nasty surprises later. This article is general information, not personal advice. If unsure, speak with a qualified adviser who can assess your situation in full.
FAQs
1. What are the new UK lending rules for bad credit mortgages in 2025?
In 2025, lenders must check your income and spending more closely. They will look at your recent debts, missed payments, and how you manage money. These rules aim to stop risky loans.
2. Can I still get a mortgage with bad credit under these new rules?
Yes, but it may be harder than before. Lenders might ask for bigger deposits or higher interest rates if you have poor credit history.
3. How do these changes affect first-time buyers with low scores?
First-time buyers with weak credit could face stricter checks on their finances; they may need to show steady income and save more for a deposit.
4. Will specialist lenders offer better options after the rule change?
Specialist lenders often help people who struggle with mainstream banks; they may keep offering flexible deals but expect careful checks on your financial background every time you apply.