This is a really interesting question. The answer like many things is that it depends.
In this post we will have a look at a few different scenarios. But first we will look at the options when it comes to applying for a mortgage and how bad credit can affect those options.
Different types of Mortgage lenders who accept adverse
In the examples below, we are going to look purely at Defaults. Obviously there are other types of adverse such as CCJs, bankruptcy etc. However bad credit is a very wide subject and I think to try and include everything in one post would be far too complicated. The idea of this post is just to explain there are different parts of the market and it may not necessarily cost more.
When we are looking at bad credit, there are 3 types of lenders:
High street mortgage lenders with adverse
these lenders are the banks on the high street that you probably think of when applying for a mortgage or opening a bank account etc. Believe it or not these lenders do accept some adverse. A couple of examples are below.
| Mortgage Lender | What can they accept | Rates/LTVs (Rates from 4/8/25) |
| Barclays | 3 satisfied defaults over 3 years old. | Up to 95%, circa 4.5% at 90% LTV |
| Metro Bank | £1,000 worth of satisfied default in the last 3 years. £500 unsatisfied in the last 3 years and unlimited after 3 years. | Up to 95%, circa 5.8% at 90% LTV |
The downside with high street though is that although the above may fit criteria, you still need to pass the credit check. There is a post here on the difference between credit scoring and credit checking which you may find useful. But in a nutshell, fitting criteria does not mean you will pass the credit check. Other factors will come in to play such as size of deposit, amount of adverse, where your deposit is from, incomes etc etc.
In an ideal world, this is where you want to be. The rates on the high street are going to be as low as you could hope for.
Building Societies and adverse
This is where things get even more complicated! Building societies fall into a couple of categories. There are building societies who like the high street, credit score (Nationwide, Skipton, Coventry for example). These lenders will have criteria like high street lenders above, but you also need to pass the credit check.
But there are also non credit scoring building societies. These work by having more of a criteria driven approach. This means its more a case of “do you fit criteria?” If you do, then there is a good chance of acceptance.
As these lenders will never be able to compete on rates, their criteria tends to be a little more flexible. A couple of examples are below.
| Must have been settled before submission of the DIP. | Thats it! How simple is that? 100 defaults, so long as they are satisfied, you fit criteria. | Up to 90%, 6.2% at 90%. |
| None in the last 3 months, maximum of £2,500 in the last 24 months. | No requirement to satisfy the defaults. | Up to 85%, 6.05% at 85%. |
| None in the last 36 months. | Similar to high street. But unlike the high street you do no have to pass a credit score. | Up to 95%, 5.25% at 90%. |
Adverse lenders mortgage rates
The adverse lenders are the complete opposite of the high street. No credit scoring, but the adverse they can accept is very black and white and also much more forgiving. But this typically comes at a cost.
The example above, 100 defaults – they could potentially all be unsettled and they will still lend up to 90% in certain circumstances (typically how long ago they were registered).
Summary
It might come as no surprise that we are big fans of Building Societies. They tend to be a middle ground between accepting adverse but also charging reasonable rates.
You can see that high street is around 4.5% upwards for a 90% LTV mortgage with the building societies kicking in at around 5.25%. That is only around 0.75% more or £100 a month on a £200k mortgage over 35 years. £100 pm, is about £2,400 on a 2 year fixed rate.
There are of course lower and higher rates with building societies, the rates available will come down to your specifics. But they offer something that you cant get on the high street.
However if you fall outside of the high street and building societies, the adverse lenders are not a million miles behind on the rates.
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