Can I Get a Mortgage After Using Payday Loans?

Yes, you can get a mortgage after using payday loans, but recent use can count against you even if every payment was on time. Time since your last loan, and how many you took, matter most.

Payday loans are short-term, high-cost loans, usually repaid over weeks or a few months. They show on your credit file for six years after the account closes, like any other credit.

Most credit problems only matter if you paid late. Payday loans are different. Many mortgage lenders treat any recent payday loan as a warning sign, because it suggests your budget did not stretch to the end of the month.

This guide covers how lenders view payday loans, how long to wait and how to improve your chances. For the wider picture, see our bad credit mortgage guide.

Do payday loans affect getting a mortgage?

Yes, often more than people expect. MoneyHelper says payday loans on your credit file can make getting a mortgage very difficult, and that lenders look at how often and how recently you used them. One old loan repaid on time is a very different story from regular use this year.

How do lenders treat payday loans?

How recent	Typical lender view
In the last 12 months	Many mainstream lenders decline. Some specialists consider it
One to two years ago	More lenders accept, particularly if it was a one-off
More than two or three years ago	Accepted by many lenders, especially with a clean record since

How many you took matters too. One loan for a car repair is viewed very differently from a pattern of rolling loans.

Lenders also see payday lending on your bank statements, which they usually check for the last three months. They look out for other short-term and high-cost credit as well, including some buy now, pay later use and frequent overdraft reliance.

What counts as a payday loan?

The FCA calls this product high-cost short-term credit. It has been subject to a price cap since 2 January 2015, which the FCA explains on its high-cost short-term credit page. Mortgage lenders tend to group these loans with other short-term borrowing, so a lender’s policy may also catch some instalment loans from the same type of provider.

What do lenders look at?

Factor	What lenders want to see
Date of last loan	As long ago as possible. This is usually the first question
Number of loans	One or two, not a pattern
Repayment	Repaid on time with no defaults or arrears
Bank statements	No new short-term borrowing in recent months
Overdraft	Not living in it every month
Affordability	A budget that works without short-term credit

How do lenders treat payday loans? (criteria checked October 2026)

We checked the criteria these lenders publish for brokers on 16 and 17 October 2026. Criteria change often, every lender also credit scores, and meeting a rule does not guarantee approval. Use this as a guide to where you might fit, not a promise.

Lender (source)	What they publish
Skipton (building society)	Declines if any payday loan was used in the last 2 years
Accord (building society)	Settled at least 12 months ago. A defaulted payday loan in the last 36 months is not accepted
Kensington (specialist)	Older than 12 months on most products, older than 6 months on one range
Bluestone (specialist)	None in 12 months on the best tier. Outstanding payday loans must be cleared by completion
Together (specialist)	Up to 3 settled in the last 12 months, not more than one active
Precise (specialist)	May be considered, subject to review

What this tells you: some lenders treat any payday loan in the last year or two as a red flag, even if it was repaid on time. Others accept recent, settled ones. Who you apply to makes the difference.

Rules are summarised in plain English from each lender’s own published criteria. Lenders change them regularly, so we check again before recommending anything.

Which situations do lenders see most?

These are illustrative situations, not Option Finance client outcomes.

How can you improve your chances?

1. Stop using payday and short-term loans now. Time since the last one matters most.
2. Keep your bank statements clean for at least three months before applying, ideally longer.
3. Clear or reduce other short-term credit, including overdrafts if you can.
4. Check your credit files to see exactly what lenders will see.
5. Build a buffer. Even a small emergency fund reduces the chance of needing short-term credit again.

If you are using payday loans to cover everyday costs, free advice is a better first step than a mortgage application. MoneyHelper has guidance on what to do if you are struggling to pay back a payday loan.

What mistakes should you avoid?

• Taking a payday loan to cover moving costs or fees. It lands in the exact statements a lender checks.
• Applying to the first lender you find. A decline adds a search and may push you to a worse option.
• Assuming repaid means invisible. It stays on your file for six years after the account closes.
• Swapping payday loans for heavy buy now, pay later use. Some lenders now look at that too.

How do payday loans combine with other problems?

If payday borrowing led to missed payments or defaults, those count too. If you are thinking of clearing several debts at once, read what debt consolidation means for a mortgage before taking a new loan.

Frequently asked questions

Speak to Option Finance about a mortgage after payday loans

Send us your credit files and recent statements. We will tell you straight which lenders would consider you now, or how long it makes sense to wait.

Book a free initial consultation using the enquiry form below. See our adverse credit mortgage advice and our guide to joint mortgages with bad credit if only one of you has used payday loans.