At the end of his two-year fix, James's CCJ will be four years old and satisfied. With two years of perfect payment history since his mortgage started, he remortgages to a near-prime lender at 5.1%. His monthly payment drops to approximately £1,110 — saving him over £200 a month. The key takeaway: the first mortgage is a stepping stone, not a permanent position.
As a rule of thumb: 10% gets you into the market with minor adverse credit; 15% opens specialist lender options for moderate issues; 20% is the threshold where most types of adverse credit become workable; 25–30% is where even more serious issues such as recent IVAs or early post-bankruptcy applications become possible. Every additional percentage point of deposit improves your position.
How much higher are bad credit mortgage rates? It depends on severity. Minor adverse credit (old missed payments) may add 0.5–1.5% to your rate. Serious issues like recent CCJs or IVAs can add 2–4% above standard deals.
Are arrangement fees higher on bad credit mortgages? Yes — specialist lenders often charge £1,000–£2,500. Always compare the total cost of the deal, not just the headline rate.
Can I remortgage to a better rate after a bad credit mortgage? Yes — this is part of the plan. A two-year fix gives you time to rebuild your credit, then remortgage to a more competitive rate when adverse markers are older.
Is a bad credit mortgage worth it versus renting? In most cases yes. Even at a higher initial rate, you are building equity. The plan is always to secure the mortgage now and remortgage to a better rate in 2–3 years.
