GUIDES
Mortgage After
Payday Loans - GoMortgage®
Took out a payday loan? Home-ownership may still be within reach.
If you’ve used a payday loan — even if it wasn’t ideal — it doesn’t automatically rule you out of getting a mortgage. What matters is how you handle the rest of your credit story now. At GoMortgage, we specialise in mortgages with a payday-loan history, helping clients move beyond past borrowing, not be defined by it.
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Bad Credit Mortgages - Mortgage after payday loans
What is a payday loan?
A payday loan is a short-term, high-cost borrowing option designed to cover urgent costs until your next pay day. They’re often easy to get, but the high interest and quick turnaround mean lenders view them as a sign of financial stress.
Used sparingly and repaid on time? It’s one thing. Used regularly or recently? That raises flags.
All payday loans and their effects stay on your credit file for up to six years.
Can I still get a mortgage after a payday loan?
Short answer: Yes. But it takes strategy.
Using a payday loan does not automatically block your mortgage. What matters is:
• When the loan was taken out
• How many payday loans you used
• How quickly you repaid them
• Whether you have any linked issues (late payments, defaults, CCJs, etc.)
• Your current deposit or equity, income stability, and affordability
Specialist lenders, not the typical high-street ones, will consider your case if it is presented properly.
Access Your Credit Report
Knowing exactly what lenders see is the first step. Checkmyfile lets you view your full credit picture across all three UK agencies in one place, helping you spot issues, track progress, and avoid surprises before you apply.
How payday loans affect your mortgage options
- Recent usage (within last 12-24 months) = the older the last loan the better the chance of approval is.
- Repeated payday short-term loans suggest dependency – lenders dislike this.
- Even a single payday loan that’s been paid off can still appear—but if the rest of your profile is strong, it may be manageable.
- You may face higher deposit requirements, lower loan-to-value (LTV) options, and higher interest rates compared to prime borrowers.
What you’ll likely need to show
- A larger deposit/equity than standard – maybe 15-30%+ depending on your
- Proof that the payday loan was repaid and no recent further high-cost
- Up-to-date bank statements showing steady income, responsible usage, no overdrafts or new payday style borrowing.
- Your full credit report across all agencies so we can identify any other credit issues.
- A compelling explanation of the payday loan(s) – what it was for, why you took it, how things have changed since.
How GoMortgage helps you navigate this
- Specialist bad-credit expertise – we see payday-loan cases regularly and know which lenders will consider them.
- Whole-of-market access – we don’t just submit to the biggest banks; we use specialist lenders who accept more complex histories.
- Case preparation – we help you build your story, gather docs, improve positioning before submitting.
- Clear roadmap – we don’t just aim for approval; we plan how to improve your situation post-mortgage (better rate, lower equity, stronger profile).
Improve your chances (before applying)
- Pull your full credit file via the three main Get Free Trial:
- Ensure you have 6+ months of clean banking behaviour (no new payday/short-term loans, no bounced payments).
- Save consistently every month to increase your deposit/equity.
- Avoid new high-cost short-term
- Choose a broker who knows which lenders will say yes with payday-loan (Hint: It’s us.)
- We’ll assess whether you’re ready to apply now, or need a pre-improvement We’ll be honest.
Ready to take the next step?
If you’ve used payday loans and thought “that’s it—I’m locked out of mortgages”, stop. It doesn’t have to be that way.
Call us at 01253 935050 or start by pulling your multi-agency credit report now: Get a Free Trial Here.
Let GoMortgage help you move from past borrowing to future owning. GoMortgage® – Real people. Real plans. Real possibilities
Speak With A Mortgage Advisor today
Contact our friendly mortgage advice team. Sound mortgage advice from the experts at GoMortgage.
Author: Chris Days Head of Content
- 5 Mins
- Updated: Nov 5 2024
Frequently Asked Questions
Will having a payday loan always stop me getting a mortgage?
No. Many lenders see payday loans as a negative indicator, but it is not an automatic blocker if the rest of your profile is strong.
How long do payday loans stay on my credit file?
Typically up to six years from the date of settlement or default.
Can I apply while I still have a payday loan outstanding?
It is possible, but your options will be very limited and the criteria will be much stricter. Only specialist lenders may consider it. We will assess whether it is advisable now or better to wait.
Will rates be much worse?
Possibly at first. Our goal is to help you secure the mortgage now and then move you to a better deal once your profile improves.
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