Can I get a mortgage with defaults?

Can I get a mortgage with defaults?

We are asked this question daily; can I get a mortgage with defaults on my credit file? The answer is yes, it is possible with the right lender and will come down to several factors including.

  • Registration date of the default
  • Default amount
  • Type of account defaulted
  • Deposit levels and loan to value

Default registration date

With defaults on the credit file, many high streets lenders will decline the application, however, there are a number of specialist lenders who are set up specifically for this type of application. It’s worth noting that some high street lenders would still potentially lend, and this is where using a bad credit mortgage broker would certainly help. Most specialist lender don’t credit score, instead opting to go off the credit profile; this means they go off the information on the credit report and not a credit score itself.

They would be looking at the date the default was registered, the more historic the defaults the more lenders would be willing to consider an application. Each specialist lender has their own criteria and that’s not always available to the general public.

To get the latest copy of your credit report click here.

Default amount

The value of the defaulted account will remain on the credit report even if this has now been paid and satisfied. Some lenders will look at the amount of the default, while other lenders have no maximum monetary value and look at the registration date alone. Each lender has different criteria, if the default is relatively low then some lenders will totally ignore it, whereas other lenders have a maximum default balance amount they will accept. Therefore, it is imperative to use a mortgage broker when looking for a mortgage with defaults.

Type of account defaulted

The type of account defaulted can make the difference when it comes to applying for a bad credit mortgage; for example, defaults on phone bills and mail order catalogues are totally ignored by certain specialist lenders. This is where your mortgage expert will be able use their expertise and find you the best lender to suit your credit profile. On the other side a default on a hire purchase agreement will be viewed more seriously by lenders.

Deposit levels & loan to value

The more deposit and in turn the lower the loan to value, the more options are available. For example, for defaults registered 2 years ago or more a minimum 10% deposit would be required. It’s much harder to get a mortgage with defaults at 5% deposit but not impossible.

What is a satisfied default?

This is when you have paid off the debt from the account that defaulted. The default will still show on your credit file for the next 6 years. This will show the lenders that despite the reason which caused your account to default, the debt was fully paid. This can give the lender more confidence that you are the type of person who does pay back their debts and this increases their confidence to lend to you.

How much can I borrow if I have defaults?

Every case is assessed on its own merits, typically it’s a multiple of your salary or if it’s a joint application both salaries. Each lender has their own affordability module and is often determined by the loan to value.

In some instances, it’s possible to borrow 5 x income. The older the defaults the more chance of using a high street lender. High street lenders will tend to offer better affordability than specialist lenders. The reason is the interest rate with a specialist lender is higher, therefore, you more payment will be higher, so this affects how much you could potentially borrow.

Affordability is vastly different from lender to lender; your mortgage expert will be able to get you the maximum borrowing for your circumstances.

How soon after a default can I get a mortgage?

It is it possible with certain lenders to be as little as 1 month, some lenders ignore certain defaults. If you have one of those defaults, such as, defaulted mobile phone contract, you wont be affected by the default.

As a more general rule of thumb it would be a minimum of 3 months, especially if the default was over £500 and not satisfied.

If the default was over £500 and registered within the last 12 months, you would need to use a specialist lender, deposit levels would be around 15%.

Can I remortgage with defaults?

Yes, the options available will depend on the date and number of defaults. Bad credit mortgage lenders each have their own set criteria around what they will accept. Most bad credit mortgage lenders don’t credit score but credit profile.

The mortgage experts we work with will be able to give you the most up to date information.

Speak to a defaults mortgage advisor

There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or can’t borrow what they need – just because one lender has declined you, don’t give up.

Our mortgage experts will look at each case before deciding which lender is right for you and your individual circumstances. All the mortgage brokers we work with are whole of market and offer unbiased advice. They will have access to all the specialist lenders to really enhance your chances of achieving the mortgage you need.

The expert brokers we work with have experience in dealing with all aspects of mortgages after defaults and importantly using the whole of the market to access the very best deals available.

To find out how we can help call us on 0300 124 5655 or complete our quick enquiry form to speak to a mortgage expert.



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