House Loans for Bad Credit

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Home » House Loans for Bad Credit

About House Loans for Bad Credit

Obtaining a Home loan for bad credit can be a more tricky and complicated process, but there are options available to those who may have less than perfect credit scores. It is important to remember that just because someone has bad credit it does not mean they cannot obtain a loan – it just means they will likely have to work a bit harder to find the right lender as high street lenders are probably out of reach.

How much does a home loan for bad credit cost?

Those with bad credit recorded should expect higher interest rates than those with excellent credit scores due to the added risk in lending money. The good news is there are options available even if you have poor credit. Subprime mortgage lenders specialise in lending money to individuals with poor or no credit history, so they may be willing to work with you even if other lenders won’t.

Who provides homeowner loans for bad credit?

Typically these loans are provided by more specialist lenders accessible through loan & mortgage brokers. When looking for a home loan for bad credit, make sure you shop around and compare different lenders in order to get the cheapest deal possible; don’t be afraid to ask questions about interest rates and terms as well as any additional fees associated with taking out the loan. Make sure you read all paperwork carefully before signing anything; don’t rush into any decisions before fully understanding what type of agreement you’re entering into. Also, keep in mind that just because one lender turns you down doesn’t mean that all others will do the same!

It is also worth noting that a ‘Home loan’ can also be known as ‘homeowner loan’, a ‘secured loan’ or a ‘second charge mortgage’.

What types of bad credit do you accept with a homeowner loan?

Types of bad credit we see on clients credit profiles include:

  • Missed payments on loans, credit cards, mail order, utility bills and communications.
  • Defaults, where several missed payments has led to the provider registering this is a defaulted account.
  • County Court Judgements (CCJ’s) where the provider has taken the client to court to try and reclaim the debt.
  • Debt Management Plans (DMP) or Individual Voluntary Arrangements (IVA) where a debt repayment plan has been set up, informally (DMP) or formally (IVA).

Before you begin your search for a house loan for bad credit, it is important to understand what your current financial situation looks like. Start by getting an accurate picture of your credit profile by accessing one of the main credit agencies being Experian or Equifax alternatively you could visit CheckMyFile which shows the data from Experian, Equifax and transunion.

Why do people take out a home loan?

The most common reasons for borrowing money are:

  • Debt Consolidation – This is where you pay off many debts and replace them with one new larger debt. Typically the goal is to reduce your outgoings each month and make the debt easier to manage.
  • Home Improvements – Raising money to update your home with a new kitchen, bathroom, extension or a loft conversion maybe.
  • Deposit for a New Property – Maybe you want to raise money to put down a deposit on a buy to let property or gift money to your children to help them get onto the property ladder.

In addition, it is essential that those looking for home loans for bad credit make sure that their borrowing history improves over time by making all payments on time each month and avoiding financial pitfalls such as overextending oneself or missing payments altogether– this will only make it more difficult for borrowers with poor or no credit histories achieve better deals from lenders later down the line.

Are there other ways to borrow money?

When considering borrowing money you should review all the options you have available such as:

  • Remortgage – This is where you will replace your current mortgage with a new mortgage that includes the additional borrowing you want.
  • Further Advance – This is approaching your existing lender and asking for additional borrowing, so you keep the current mortgage in place and get a second mortgage, also known as a further advance.
  • Secured Loan – This is a separate loan which is secured upon the property.

By working with an experienced broker, you will be able to look into all 3 options and get advice around the best way to borrow money with your circumstances.

How much could I borrow on a house loan?

This will depend upon several factors such as, how much equity you have in your property, how much you can afford to borrow and how long you can borrow the money for. Speaking with broker will help you assess the options available.

How long does a house loan for bad credit take to arrange?

From application to completion, this typically takes around 1 month. The speed of the application really depends upon how quickly clients provide the required paperwork as lots of documents would be needed such as proof of ID, proof of income, bank statements etc.

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House Loan with Bad Credit FAQ’s

This will depend upon many factors such as how much you can afford to borrow taking into consideration all your income and outgoings, how much equity you have in your property and how long you can borrow the money for. Speaking with a broker is key to understanding your borrowing options.

Some specialist lenders will accept missed payments, defaults and county court judgements recorded on a client’s credit profile.

The interest rate charged will be higher than offered by high street lenders. The interest rate charged will depend upon several factors such as your credit history, how much you are borrowing, over how long you are borrowing the money for and the equity you have in your property. Seeking advice from a specialist broker is important to understand all your options and obtain accurate quotes.

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