Getting a Mortgage After a Payday Loan

Using a payday loan can raise questions about your mortgage prospects. Many lenders view payday loans negatively—even when repaid on time—because they may indicate financial instability.

In this guide, we set out whether you can still get a mortgage after a payday loan, how this could affect your application, which lenders may be willing to consider you, and practical steps to improve your chances of approval and access to the best rates.

Can you get a mortgage if you’ve had a payday loan?

Yes—you can still obtain a mortgage if you’ve used a payday loan. The timing and conduct of that loan matter. Here’s how recency typically affects a mortgage application:

• Within the last 12 months: Most high street banks and lenders will decline an application if a recent payday loan appears on your credit file.

• 1–2 years ago: Your options are better, but many lenders remain cautious. You may need a specialist lender.

• Over 2 years ago: A historic payday loan that was repaid on time is less of an obstacle, though it can still narrow your choice of lenders.

The upside: some mortgage lenders do accept applicants with payday loans—even relatively recent ones—particularly where it was a one-off and you can demonstrate financial stability since.

How does a payday loan affect your mortgage application?

Below are the key factors that can affect your mortgage prospects if you’ve used payday loans, and the likely knock-on effects during an application.

Why payday loans can hinder your application

• Timing: Payday borrowing within the last 12 months is viewed most negatively.

• Repayment history: Any missed or late repayments are especially harmful.

• Frequency: Multiple payday loans suggest ongoing financial pressure and weak money management.

• Lender policies: Some high street lenders apply strict rules and may decline applications outright.

Likely consequences for your mortgage application

• Higher deposits: You may be asked for a larger deposit—often 15% to 25% rather than 5% to 10%.

• Fewer lenders: Your pool of mainstream lenders may shrink, limiting available options.

• Higher interest rates: Some lenders price in the perceived risk, or you may need a specialist lender.

• Extra documentation: Expect more evidence to prove financial stability—for example, additional bank statements, payslips, and proof of income.

Which lenders will accept payday loans in your history?

Around 50 UK lenders will consider mortgage applications from borrowers who have used payday loans, and many of these are available only via a broker. The exact number open to you will depend on the details of your payday loan history and the overall strength of your application.

Below are examples of well-known UK lenders and how they typically approach applicants with payday loans:

• Halifax – No formal published policy, but payday loans are generally viewed unfavourably. Cases may be assessed individually, so speaking to a broker first can help you avoid an unnecessary decline.

• NatWest – Likewise, no set policy. The effect of past payday borrowing may show up in affordability and credit checks. Broker guidance is advisable if you wish to minimise the risk of a decline.

• Bank of Ireland (UK) – Usually will not accept applicants with a payday loan in the last 12 months, but may consider cases where the loan was over a year ago, subject to a detailed review of the wider application.

The most reliable way to map all realistic options is to consult an experienced mortgage adviser.

Tips for getting a mortgage after a payday loan

Here are practical steps to improve your chances of getting a mortgage after using a payday loan:

• Get expert support: This is a niche area. A skilled mortgage adviser knows lender policies and can match you with a suitable lender from the start.

• Avoid multiple applications: Repeated applications—especially after a decline—can harm your profile. Pause and speak to an adviser before applying again.

• Strengthen your profile: Raise your credit score, cut existing debts (which also improves your debt-to-income ratio), and check your application for errors or gaps.

• Show stability: Demonstrate steady income, consistent employment, sensible day-to-day spending, and low credit card balances (keep credit utilisation down).

• Delay your application if possible: If you can wait, leaving at least 12 months since your last payday loan can help with many lenders.

• Build a larger deposit: A bigger deposit can improve options and pricing with some lenders. If you’re waiting to apply, use the time to save.

Can you remortgage after a payday loan?

Yes—you can remortgage after using a payday loan, though securing the most competitive deal may be harder. The same principles that apply to new applications generally apply here. If the payday borrowing was recent, you may need to look at specialist lenders or wait until more time has passed before remortgaging.

If the payday loan was over one to two years ago and the rest of your finances are strong, a wider range of lenders is likely to consider your remortgage. That broader choice typically improves your chances of accessing the best rates and overall deal.

Frequently Asked Questions