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If you've had missed payments, defaults, a CCJ or other credit problems in the past, you might be wondering whether you can still get a mortgage, and how much you could borrow. The good news is that bad credit doesn't have to stop you from owning a home.
Most mortgage calculators assume you have a clean credit record, so they may not give you a realistic picture. Our bad credit mortgage calculator is designed with your situation in mind. It takes into account how lenders typically view different credit issues, so you can get a clearer idea of what might be possible.
How to use our calculator
To get your estimate, simply enter:
Your annual income before tax. If you're applying with someone else, include both incomes.
Your monthly debt payments, such as loans, car finance and credit card payments.
Your available deposit, which is the amount you've saved towards your new home.
The type of credit issue you've had, choosing from missed payments, a CCJ or default, or bankruptcy or an IVA. If you've had more than one, choose the most serious.
How long ago your most recent issue was, choosing from under two years, two to four years, or four to six years.
Your preferred mortgage term, which is how many years you'd like to take to repay your mortgage.
The more accurate your answers, the more useful your results will be.
What the calculator can tell you
Our calculator gives you a rough picture of your mortgage options with bad credit. It can show you:
How much you might be able to borrow, based on how lenders typically treat your type of credit issue
Whether your deposit is likely to be big enough, as lenders often ask for larger deposits from people with bad credit
Whether you're likely to pass a lender's stress test, which checks you could still afford your payments if interest rates went up
How your options could improve over time, as your credit issues get older
How the calculator works
Income multiples
Most mainstream lenders will let you borrow around four and a half times your income. If you have bad credit, lenders may offer a lower amount to reduce their risk.
Our calculator uses an income multiple of between 3.5 and 4.25 times your income, depending on how serious and how recent your credit issues are. The more minor and older your issues, the higher the multiple.
Debt deduction
Lenders always take your existing debts into account. Our calculator subtracts your yearly debt payments from your maximum borrowing to give you a more realistic figure. Here's the formula it uses:
Maximum loan = (annual income × income multiple) – annual debt payments
Deposit requirements
Lenders usually ask for a bigger deposit if you have bad credit. Our calculator compares your deposit with what lenders are likely to ask for, which can range from around 10% for minor issues to 25% to 30% for more serious ones, such as bankruptcy.
Stress test
Lenders check that you could still afford your mortgage if interest rates rose. Our calculator tests whether your payments would still be affordable if rates went up by 2%. If your payments would take up more than 40% of your estimated take-home pay, it will flag that your application could be at higher risk of being declined.
Waiting it out
Credit issues have less impact the older they get, and most drop off your credit file after six years. Our calculator shows you how your options could improve if you wait a little longer before applying.
Calculations all done? Now get the advice you need...
Example calculations
Here are a few examples to show how the calculator works in practice. These are for illustration only, and your own results will depend on your circumstances.
Example 1: Minor credit issues
A borrower earning £60,000 a year, with £350 a month in debt payments and a couple of missed payments more than two years ago.
| Factor | Result |
Annual income | £60,000 |
Income multiple | 4.25 times income |
Annual debt payments | £4,200 |
Estimated maximum loan | £250,800 |
Likely minimum deposit | Around 10% |
Example 2: A CCJ more than three years ago
A borrower earning £40,000 a year, with £200 a month in debt payments.
| Factor | Result |
Annual income | £40,000 |
Income multiple | 3.75 times income |
Annual debt payments | £2,400 |
Estimated maximum loan | £147,600 |
Example 3: A recent bankruptcy or IVA
A borrower earning £35,000 a year, with £100 a month in debt payments.
| Factor | Result |
Annual income | £35,000 |
Income multiple | 3.5 times income |
Annual debt payments | £1,200 |
Estimated maximum loan | £121,300 |
Likely minimum deposit | Around 25% to 30% |
In this last example, waiting a couple of years for the bankruptcy or IVA to get older could mean a smaller deposit, a lower interest rate and a wider choice of lenders.
How accurate is the calculator?
Like any online calculator, ours can only give you a rough idea of what to expect. Every lender has its own rules, and when you apply, they'll look at your full credit history, income and outgoings in detail.
We've designed our calculator to reflect how lenders typically treat people with bad credit, but it can't cover every type of credit issue or every situation. Please treat your results as a helpful starting point, rather than a guarantee.
For a more accurate picture, speak to one of our advisers, who can look at your full circumstances.
Do all lenders reduce how much you can borrow?
Not always. Many lenders will reduce the amount you can borrow if you have bad credit, but some specialist lenders are more flexible. Depending on your circumstances, some may even let you borrow five times your income or more.
These higher amounts are usually reserved for people with minor or older credit issues, a larger deposit, a higher income or a particular profession. Lenders' criteria change regularly, so our advisers can tell you which lenders are likely to offer you the most.
Can you get a mortgage with bad credit but a good income?
Yes. A higher income won't erase your credit history, and lenders will still look closely at any issues you've had. If your problems are serious or very recent, such as a bankruptcy or repossession, a high income alone may not be enough to get you approved by some lenders.
However, a higher income can open the door to more lenders and higher income multiples. One of the best things you can do is save a larger deposit, as this reduces the lender's risk and gives you access to more deals and lower rates.
Ways to improve your chances
Whatever your results, there are steps you can take to give yourself the best possible chance of being approved:
Check your credit reports with all three main credit reference agencies (Experian, Equifax and TransUnion), and ask for any mistakes to be fixed - you can access a free trial (cancel anytime) on Checkmyfile to review your reports for free.
Register on the electoral roll at your current address.
Settle any outstanding debts where you can, and make sure any CCJs or defaults are marked as satisfied.
Keep up with all your payments, as a recent record of paying on time shows lenders your situation has improved.
Avoid applying for new credit in the months before your mortgage application.
Save a bigger deposit, if you can.
Speak to a broker before you apply, so you only approach lenders that are likely to accept you. Being turned down can leave a mark on your credit file.
What to do next
Now that you have an idea of how much you could borrow, the next step is to speak to an expert. At Echo Finance, our friendly advisers specialise in helping people with bad credit find the right mortgage.
Here's why people choose us:
We understand bad credit and know which lenders are most likely to say yes
We compare deals from across the market to find the right one for you
We can access exclusive deals you might not find on your own
We're 5-star rated on leading review websites
Ready to explore your options? Get started here for a free, no-obligation chat with one of our advisers.
FAQs
Lenders assess first-time buyers in the same way as anyone else, so the amount you can borrow will depend on your income, outgoings, deposit and the type of credit issues you've had. If your options are limited, family support, such as a guarantor mortgage or a gifted deposit, or a government scheme could help.
Find your local adviser
- Residential mortgages: Everything from fixed-rate to tracker mortgages for first-time buyers, homemovers and remortgage borrowers
- Specialist mortgages: For borrowers who fall outside of standard lending criteria, including people with bad credit, self-employed professionals and more
- Later-life lending: Including advice on equity release, mortgages for pensioners and retirement interest only (RIO) mortgages
- Bridging & Commercial: We have specialist advisors on hand for commercial mortgages, bridging loans, development finance and more
- Insurance & Protection: Including life, home and critical illness cover for families and individuals, as well as landlord and business protection insurance
Echo Finance is regulated by the Financial Conduct Authority and is reviewed annually by an independent compliance company. All of our brokers and advisers hold industry-standard qualifications, such as CeMAP, CeRER and DipMap, where required.
We are committed to providing advice through the channels that best suit your needs. Our brokers can provide advice via phone, email, video and web chat from anywhere in the UK, but we also aim to offer face-to-face appointments for those who request them.