How do payday loans affect getting a mortgage?

illustration of How do payday loans affect getting a mortgage?

Generally, mortgage providers don’t like payday loans because they take it as a sign that you struggle to manage your money, and might again in the future. 

Lenders base all their decisions on risk, and people with a history of payday loans are deemed ‘high risk’. Some lenders think relying on payday loans to cover your everyday living expenses means you’ll struggle to keep up with your monthly repayments. But this isn't true in a lot of cases. And that’s why it’s important to work with a payday loan mortgage broker who’ll take the time to understand you and your situation. Make an enquiry and one of our Mortgage Experts will call you back for a judgement-free chat to explore your options. 

Can I get a mortgage with a history of payday loans?

You might’ve been told otherwise, but it is possible to get a mortgage after a payday loan. It’ll be tricky, and you’ll have fewer options open to you, but it can be done. As with any mortgage application, your unique situation will affect how likely you are to get accepted. Things like your income, the size of your deposit, and whether you have any other credit issues will all be taken into account. 

Most high street banks have a blanket policy not to lend to give mortgages to people who’ve taken out a payday loan. But just because some lenders will refuse you, doesn’t mean all will. There are specialist lenders that exist purely to help you if your situation differs from the norm. They’re set up differently from the mainstream lenders, and are more likely to look at your individual situation, rather than just turn you down on the spot. 

They’ll want to know when you took out the loan(s), how much you borrowed, how many payday loans you’ve had, and how quickly you paid them back. Usually, the older the loan, the more likely you are to be accepted. Some payday loan mortgage lenders will consider the reason why the money was borrowed, how it was repaid and the efforts you’ve made to make sure you don’t need to use one again. See how specialist lenders are different from high street banks

How do payday loans affect getting a mortgage?

On their own, payday loans aren’t actually a bad credit issue and don’t reduce your credit rating if you’ve paid them back on time.

The problem when it comes to mortgages is that lenders see payday loans as a red flag, and that’s why it can be more difficult. 

Mortgage lenders carry out a detailed analysis of your credit report before they agree to give you a mortgage, and will look for bigger credit issues such as CCJs, IVAs and bankruptcies. If your credit report is otherwise healthy, it’ll be easier to get accepted. 

If your most recent payday loan was more than six years ago and you have no other credit issues, you’ll have far more mortgage options available to you than if you have lots of recent ones on your credit file. 

When it comes to getting a mortgage, it’s all about which lender you go to. Working with a specialist mortgage broker (like us!) who has experience getting mortgages for people who’ve used payday loans will really improve your chances. Make an enquiry to speak to one of our Mortgage Experts.

Can I get a mortgage with bad credit and a history of payday loans?

If you’ve got bad credit as well as payday loans on your file, it’ll be a lot harder to get a mortgage. It’s not impossible, but you’ll definitely need the help of a payday loan mortgage broker to help you find a lender willing to accept you. That’s where we come in. We only do the tricky stuff, and our Mortgage Experts have a proven track record getting mortgages for people who’ve used payday loans. Make an enquiry to find out your options. 

How long after a payday loan can I get a mortgage?

If your most recent payday loan was more than six years ago and you have no other credit issues, you’ll have far more mortgage options available to you than if you have lots of recent ones on your credit file. 

Lenders will be able to see any payday loans and other borrowings on your credit history for six years. Some lenders will still ask you if you’ve ever taken out a payday loan, even if it’s disappeared from your file. If this happens, you should always be honest about it - it’ll save you time and money in the long run! 

With any financial issues, it’s best to face them head on. Finding out your credit score and reviewing your report will give you a great place to start from. You can get a free copy of your credit file with a trial of checkmyfile* (usually £14.99 a month). Once you have your report, you can then check for any errors and see where you can improve.

*Heads up, when you click through to our affiliate links, we may earn a small commission at no extra cost to you. We only recommend sites we truly trust and believe in.

Will multiple payday loans affect my mortgage application?

The more payday loans you have on your credit file, the trickier it’ll be to get accepted for a mortgage. Taking out lots of payday loans can signal to a mortgage lender that you struggle to make ends meet, and that you’re more likely to default on your mortgage payments. 

If your multiple loans were a long time ago, your chances are better. But if you’ve had lots of recent payday loans, it’ll be more difficult. If you’re worried about your payday loan mortgage chances, speak to one of our Mortgage Experts who can look at your options.  

I got my mortgage declined because of payday loans, what can I do?

Being refused a mortgage can be frustrating and demoralising. It can be really hard to know what to do next, or where to turn. It’s tempting to apply to another lender after being refused a loan, but too many unsuccessful mortgage applications can negatively affect your credit report - the last thing you need. 

It’s very common for your mortgage to be rejected from a high street bank if you have a history of payday loans. They’re just not set up to deal with applications that aren’t straightforward. 

If your payday loan mortgage application has been rejected, don’t rush to apply to another mortgage provider. Speak to a specialist payday loan mortgage broker who can consider all your options and give independent advice. Make an enquiry for a judgement-free chat with one of our Mortgage Experts. 

Read more in our Guide: What to do if you’ve been refused a mortgage.

Who are the mortgage lenders that accept payday loans?

Most high street lenders will refuse your mortgage application if you’ve taken out payday loans in the past. You’ll usually have to go to a specialist mortgage lender who’ll look at your application on a case-by-case basis. 

Specialist lenders offer bespoke services for people who don't fit the narrow criteria of the high street banks or building societies. They use human underwriters (someone that weighs up the risks associated with lending to you) and assess each application on a case-by-case basis. They look for the story behind the numbers and are set up to deal with applications that aren't straightforward. 

Because they’re more niche, they aren’t usually available directly to you as a borrower. They won’t come up in online comparison sites and your banks won’t tell you about them - they only work through specialist mortgage brokers, like us. Check out our Mortgage Lenders For Bad Credit Guide, or make an enquiry to speak to one of our experts. 

Payday loan mortgage brokers

Mortgages after payday loans aren’t impossible. But the best way to find the right mortgage deal is to work with a specialist mortgage broker. Our Mortgage Experts live and breathe the mortgage market, and have great relationships with lenders. They’ll work hard to find the right deal at the right rate, and give your application the best chance of being accepted.

Make an enquiry and one of our friendly experts will call you back and explore your payday loan mortgage options.


Our Mortgage Experts are fully-qualified with experience in bad credit, self-employed and complex mortgages. They have a proven track record of getting mortgages for people who’ve been rejected elsewhere.

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