How bad credit affects your mortgage options
Mainstream lenders use automated credit scoring and tend to decline anything with recent adverse marks. Specialist (adverse credit) lenders instead look at what the issue was, how severe, how recent, and whether it's resolved. The best bad-credit mortgage depends on those details, so the goal is matching your specific history to a lender that accepts it, at the lowest rate possible.
1. Mortgages with minor or historic credit issues
If your blips are small (the odd missed payment) or old (defaults satisfied 3+ years ago), many near-prime and even some high-street lenders accept you at close to standard rates. Best for buyers whose credit has recovered — the key is a clean recent 12–24 months.
2. Mortgages with defaults or CCJs
Specialist lenders price by the age and size of the default/CCJ. A satisfied default from two years ago is treated very differently to an unsatisfied one from last month. Best for buyers with one or two resolved adverse marks who can put down a slightly larger deposit (often 10–15%).
Pros: opens the door despite adverse marks. Cons: higher rates and bigger deposit than prime mortgages.
3. Mortgages after a debt management plan (DMP) or IVA
You can get a mortgage during or after a DMP, and after an IVA (usually once completed or settled). Specialist lenders want to see the arrangement was maintained and ideally finished. Best for buyers rebuilding after formal debt solutions — typically with a 15%+ deposit.
4. Mortgages after bankruptcy or repossession
The most specialist end. Most lenders want bankruptcy discharged for a set period (often 3+ years) with clean credit since. Rates and deposits are higher, but options exist and improve every year you stay clean.
5. Larger-deposit bad-credit mortgages
Across all of the above, a bigger deposit is the most powerful lever. More equity reduces risk, widening choice and lowering your rate. If you can stretch to 15–25%, you'll often access materially better adverse-credit deals.
What helps you get the best bad-credit rate
- Time — the older the adverse mark, the better the rate
- Resolution — satisfied/settled marks beat outstanding ones
- Clean recent history — 12+ months of perfect payments
- Bigger deposit — reduces risk and rate
- The right lender — applying to the wrong one adds a hard search and wastes time
How to find the best bad-credit mortgage
This is where a specialist broker matters most — applying to the wrong lender means a decline and a credit-file footprint. A whole-of-market adverse-credit broker knows which lenders accept your specific issue and at what rate. Find a bad credit mortgage specialist through Nesto — free, no obligation.
Frequently asked questions
Can I get a mortgage with a default?
Yes. Specialist lenders accept defaults, pricing by age, size and whether satisfied. A satisfied, older default has little impact with the right lender.
How long after a CCJ can I get a mortgage?
Some lenders accept satisfied CCJs immediately; rates improve sharply once they're over 3 years old.
Can I get a mortgage during a DMP?
Yes, with specialist lenders, provided you've maintained the plan. Completing it first widens your options.
Will a bigger deposit help with bad credit?
Significantly. More equity lowers the lender's risk, giving you more choice and better rates.
Should I check my credit file before applying?
Always. Fix errors, confirm what's recorded, and let a broker match you to a lender that accepts it — avoiding declines that harm your file further.