Having adverse credit does not automatically prevent you from getting a mortgage. It does, however, reduce the number of lenders willing to consider your application, and it can affect the rates and terms available to you. In London, where property prices are higher than in many parts of the UK, adverse credit creates an additional challenge: fewer lenders combined with higher affordability requirements can narrow your options further.
It is worth noting that specialist lenders in this part of the market often focus on the circumstances behind a credit issue, as well as what has happened since, rather than relying solely on an automated score. This guide explains what counts as adverse credit, how lenders assess it, what it means in practice at London price points, and how a broker can help you find a suitable lender. For an overview of our London mortgage services, see our London office page.
What Counts as Adverse Credit?
Adverse credit covers a range of issues on your credit file. The severity and recency of the issue affect how lenders treat it. Common types include:
Late payments. One or two late payments are the mildest form of adverse credit. Many lenders will still consider you, particularly if they are historic and there is no ongoing pattern.
Defaults. A default is recorded when a lender formally closes an account because of persistent non-payment. Defaults are more serious than late payments. Some lenders will consider applicants with defaults, depending on the amount, the date of the default, and whether it has been satisfied.
CCJs (County Court Judgments). A CCJ is a court order to repay a debt. It remains on your credit file for six years. Lenders treat CCJs more seriously than defaults, and the amount, date, and whether it has been satisfied all matter.
IVAs (Individual Voluntary Arrangements). An IVA is a formal agreement to repay debts over a set period. Lenders treat IVAs as significant adverse credit. Some specialist lenders will consider applicants after an IVA has been completed, though options are more limited.
Bankruptcy. Bankruptcy is the most severe form of adverse credit. Most lenders will not consider applicants who are currently bankrupt. After discharge, some specialist lenders will consider applications, but typically only after a number of years have passed and with a larger deposit.
Debt management plans. A DMP is an informal arrangement to repay debts at a reduced rate. Lenders view these with varying levels of caution depending on whether the plan is active or completed.
Thin or limited UK credit history. London has a large international population. Buyers who have recently moved to the UK, or who have spent long periods abroad, may have a limited UK credit file rather than adverse credit in the traditional sense. Some lenders are better equipped to assess these cases than others. A broker can identify which lenders take a more flexible approach to thin credit histories.
How Lenders Assess Adverse Credit
Lenders do not treat all adverse credit the same way. Specialist lenders in this market often focus on your current affordability and the circumstances behind your credit issues rather than an automated score alone. The key factors they consider are:
Severity. A single late payment is treated very differently from a CCJ or bankruptcy. The more serious the issue, the fewer lenders will consider you and the stricter their criteria.
Recency. Historic issues are usually viewed more favourably than recent ones. An adverse event from several years ago is generally treated differently from one in the last twelve months. Criteria vary by lender and by the type of credit event.
Amount. A small default or CCJ may be treated differently from a large one. Some lenders set limits on the total value of adverse credit they will accept.
Satisfaction. Whether a debt has been repaid (satisfied) matters. A satisfied CCJ is generally viewed more favourably than an unsatisfied one.
Pattern. A single historic issue is treated differently from a pattern of repeated credit problems. Lenders look for evidence that the underlying issue has been resolved.
Why Adverse Credit Is More Challenging in London
In lower-priced markets, adverse credit may still leave a realistic path to homeownership because the borrowing required is smaller and more lenders can accommodate you within their affordability criteria. In London, where property prices are among the highest in the UK, the situation is more demanding.
Adverse credit restricts your choice of lender, and higher London property prices mean you need to borrow more. The combination of restricted lender choice and higher borrowing can create a double barrier that is harder to overcome without specialist advice. This does not mean a mortgage is unavailable, but lender selection often becomes more important.
A larger deposit can help offset this. Reducing your loan-to-value can open up more specialist lenders and can improve the rates available to you. At London prices, the absolute deposit sums involved are significant, and building a larger deposit takes time — but it can meaningfully broaden the lender options available. For more on deposits at London price points, see our deposit guide.
Self-Employed With Adverse Credit
London has a large self-employed and contractor population, and some buyers face both self-employed income assessment and adverse credit at the same time. This combination narrows lender choice further, as the application needs a lender comfortable with both factors. It is not uncommon, and specialist lenders do consider these cases, but the lender selection becomes more important. For more on how lenders assess self-employed income in London, see how lenders assess self-employed income in London.
What You Can Do to Improve Your Position
Check your credit report early. Review your report with Equifax, Experian, and TransUnion at least three to six months before you plan to apply. Look for errors, outdated information, or accounts you do not recognise. Correcting mistakes can improve your position.
Allow time for adverse credit to age. If possible, waiting until the adverse event is further in the past can improve your options. Many lenders apply time-based criteria, which vary by lender and by the type of credit event.
Save a larger deposit. A lower loan-to-value gives you access to more lenders and can offset the risk that adverse credit represents. At London prices, this means saving a significant sum, but the improvement in lender choice can be meaningful.
Satisfy outstanding debts where possible. Paying off a CCJ or default, even if it has already been recorded, shows lenders you have addressed the issue.
Be prepared to explain what happened. Lenders and underwriters are often more willing to consider adverse credit when there is a clear explanation — for example a period of illness, redundancy, or relationship breakdown — and evidence that the underlying circumstances have changed.
Avoid new credit applications. Do not apply for new credit cards, loans, or finance in the months before your mortgage application. Each hard search leaves a mark on your file, and multiple searches in a short period can reduce your score.
Adverse Credit Mortgages as a Stepping Stone
An adverse credit mortgage is often a route back to mainstream lending rather than a permanent arrangement. Many borrowers take a specialist mortgage now, maintain a clean payment record, and then look to remortgage onto a more competitive mainstream product once the adverse credit has aged and their credit profile has improved.
This is worth bearing in mind when weighing up the rates and terms of a specialist mortgage: it may be a stepping stone rather than the rate you stay on indefinitely. When the time comes, a broker can review whether remortgaging onto a more competitive product is achievable. For more on remortgaging in London, see our London remortgage guide.
Why a Broker Matters for Adverse Credit
Adverse credit mortgage applications are one of the areas where broker advice makes the most difference. Lenders differ significantly in how they treat different types of credit issues. A lender that declines an application with a historic default may not be the right lender for your situation — another may consider it with a clear explanation and a reasonable deposit.
A broker with access to specialist lenders can identify lenders whose criteria may be better aligned with your credit profile before you apply. This can help reduce unnecessary credit searches and avoid speculative applications. Some specialist lenders are only available through intermediaries and are not visible on comparison sites or through high-street banks. For more on how whole-of-market brokers work, see how whole of market brokers work.
Why We Wrote This Guide
Fitch & Fitch is an independent, whole-of-market mortgage broker with offices in Canary Wharf, Cambridge, and Colchester. We are an appointed representative of JLM Mortgage Network, authorised and regulated by the Financial Conduct Authority (FCA Registration Numbers 955014 and 300629). You can verify this on the FCA Register at register.fca.org.uk.
Fitch & Fitch has received recognition from independent industry bodies including the Mortgage Strategy Awards, Mortgage Introducer Awards, and Legal & General Mortgage Club Awards. These awards are judged independently and can be verified on the respective awards websites.
We wrote this guide because we believe an informed borrower makes better decisions. For further information about our London mortgage services, visit our London hub page.
Frequently Asked Questions
Can I get a mortgage with adverse credit in London?
In some cases, yes. Lenders focus on the specific event, how recent it was, and whether it has been satisfied, rather than applying a blanket view of credit history. The options available depend on the type, severity, and recency of the adverse credit, as well as your deposit, income, and overall affordability. A broker can assess your situation and identify which lenders may be suitable.
Can I get a mortgage with defaults over two years old?
Possibly. Older defaults are generally viewed more favourably than recent ones, and whether the default has been satisfied also matters. Many specialist lenders apply time-based criteria, and a default that is a few years old and satisfied is treated differently from a recent unsatisfied one. The right lender depends on the full picture, including the amount, recency, and your wider circumstances.
How long does adverse credit stay on my file?
Many adverse credit entries remain on your credit file for around six years, although the exact treatment can depend on the type of event and the credit reference agency. CCJs and bankruptcy are commonly recorded for six years, subject to specific rules and circumstances. The impact on mortgage options typically reduces as the entry ages, but lender criteria vary.
Do I need a bigger deposit with adverse credit?
In many cases, a larger deposit can help. A larger deposit reduces the lender’s risk and can broaden the lender options available. Reducing your loan-to-value can make a noticeable difference to the range of lenders willing to consider your application. At London prices, this means a larger absolute sum.
Can I remortgage to a better rate once my credit improves?
Often, yes. An adverse credit mortgage is frequently a stepping stone. If you maintain a clean payment record and the adverse credit ages, you may be able to remortgage onto a more competitive mainstream product in due course. Whether this is achievable depends on your circumstances at the time. For more, see our London remortgage guide.
I have a limited UK credit history rather than adverse credit. Can I still get a mortgage?
Yes, in many cases. A thin credit file is different from adverse credit, but it can still restrict your lender choice because some lenders require a minimum credit history to assess your application. London has a large international population, and this is a common situation for buyers who have recently moved to the UK or spent time abroad. Some lenders are better equipped to assess these cases. A broker can identify which lenders take the most suitable approach.
Will applying for a mortgage with adverse credit affect my credit score?
A full mortgage application involves a hard credit search, which is recorded on your file. Multiple hard searches in a short period can reduce your score. This is one reason it is important to avoid speculative applications and to approach lenders selectively. A broker can help you identify which lenders to approach so you are not applying speculatively.
Can a broker guarantee I will get a mortgage?
No. A broker cannot guarantee approval, and you should be cautious of anyone who suggests otherwise. What a broker can do is assess your situation, identify lenders whose criteria may suit your profile, and help present your application as clearly as possible.
Next Steps
If you have adverse credit and are looking to buy in London, a useful first step can be understanding how lenders are likely to view the credit issue and whether there are steps that could strengthen the application before it is submitted. A broker who understands how different lenders treat different types of credit issues can help you assess this.
For further information about our London mortgage services, visit our London hub page.
Related Guides
Self-Employed Mortgages in London
How Much Deposit Do You Need to Buy in London?
How Much Can I Borrow for a Mortgage in London?
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.