Mortgage With Defaults
Mortgage with Defaults topics covered
- Can I get a mortgage with a default?
- Are some defaults more severe than others?
- What is a default notice?
- Mortgage with defaults deposit levels & loan to value
- Which mortgage lenders accept defaults?
- What is a satisfied default?
- How soon after a default can I get a mortgage?
- Can I remortgage with defaults on my credit file?
- Can I get a buy-to-let mortgage with defaults?
- How much can I borrow if I have defaults?
- Can I get a mortgage with defaults in Scotland?
- Speak to a mortgage with defaults advisor
Updated 17th August 2021.
Mortgage with Defaults Advisors.
Our Mortgage Experts Online accredited advisors are specialists in mortgage with defaults. Furthermore, our expert’s knowledge will help you to find the right mortgage on the market.
From big high street banks and building societies, to smaller more niche mortgage lenders, there is a lot of choice out there. Subsequently, this may feel completely overwhelming to you. Likewise, you may have no idea where to start. We can offer you guidance and help you navigate the complex world of mortgage with defaults.
The brokers we work with are whole of market and offer completely unbiased advice, ensuring that you get the absolute best deal available.
Scroll down for more information and FAQ’s
Can I get a mortgage with a default?
Yes, getting a mortgage with defaults on your credit file is possible. There are thousands of people with defaults on their credit file and help is at hand when it comes to getting a mortgage.
When it comes to recommending a mortgage with defaults on your credit file, its vital you give your advisor all the information. All conversations between you and your mortgage advisors are treated with the strictest confidence. The advisors can only give you the correct mortgage advice with all the information being presented correctly.
Mortgage lenders are more interested in your recent credit profile, even if you have had a default registered in the last couple of years there should still be mortgage options available.
Getting a mortgage with defaults requires extra care and attention, the last thing you want to do is have lots of failed mortgage applications showing on your credit report.
The experts we work with are vastly experienced in arranging mortgages with defaults and work in all areas of the UK. We have successfully placed clients with defaults even with high street lenders.
The main factors will be.
- Registration date of the default
- Default amount
- Type of account defaulted
- Deposit levels and loan to value
Are some defaults more severe than others?
Yes, defaults on secured lending such as mortgages, secured loans and hire purchase agreements are considered extremely serious and weighed accordingly by lenders when making lending decisions.
However, some defaults are considered less serious, mail order, utilities and communications being the main three. The reason being these companies are renowned for being quick to issue defaults. These can also occur when moving to a new house and accounts are not properly closed. These are known to have minimal balances which then default. Some lenders will totally dis-regard the default from these companies. Speak to a mortgage expert for the most up to date information.
Defaults on unsecured loans and credit cards fall into a middle ground, these defaults will always be taken seriously by lenders.
What is a default notice?
A default notice is a formal letter which must sent after 3 missed payments with the same lender, this can also happen if the full payment has not been made i.e., partial payment. This is a legal requirement but not a guarantee that any legal action has started. You can only receive a default notice for debts regulated by the Consumer Credit Act. The notice will contain the following information.
- The terms of the agreement which have been broken.
- The amount needed to be paid to bring the account up to date.
- The date this payment should be made by
- Implications of what will happen if the payments are not made.
- How long you have to respond to the notice (usually 14-28 days)
- Full contact details to discuss if you can’t make the payments.
What can the lender do, they can do the following:
- Demand full and immediate repayment of the full balance
- Contact the County Court to start action.
- Start repossession proceedings (depending on type of credit)
- Sell your debt onto a collection agency (this can result in the default being registered again)
The best advice is to always contact the creditor and speak to them, engaging with them will generally be a better outcome then ignoring the problem.
Default registration date.
With defaults on the credit file, many high streets lenders will decline the application, however, there are specialist lenders who are set up specifically for this type of application. It is 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 do not 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 is not always available to the general public.
To get the latest copy of your credit report click here.
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.
Mortgage with defaults deposit levels & loan to value.
The more deposit and in turn the lower the loan to value, the more mortgage options are available. For example, for defaults registered 2 years ago you will need a minimum of 10% deposit, more options will be become available with a 15% deposit.
The higher deposit level you have the less or a perceived risk you are to the mortgage lender. As you would likely need to use a specialist lender the rates of interest will naturally be higher for a mortgage with defaults.
Generally, once a default has been registered over 3 years then better mortgage options become available, if the default is under £500 this will also increase your chance of getting a mortgage with defaults on your credit file.
How much can I borrow if I have defaults?
Generally, the mortgage with default lenders are tighter on their affordability calculation than the normal high street lenders. If you have a good credit history, you can borrow up to 5 x income. The level of income will play a part, the starting the figure is around £50,000, at this level there are adverse lenders working at 5.5 x income. Each lender has then own calculation, most lenders are current operating at 4.5 x income, minus any commitments.
With defaults on your credit report your maximum borrowing may be impacted, because the interest rate will be higher, meaning monthly payments would be higher than high street mortgage rates. The risk factor of lending to clients with previous defaults will also be a factor.
Your mortgage experts will be able to give you the maximum borrowing figures available, generally, you can borrow more by taking a 5-year fixed rate.
Which mortgage lenders accept defaults?
Each mortgage lender has different criteria around what they will accept. Approaching the right lender will depend on a variety of different factors. Lenders will look at the overall risk of the case.
Some high street lenders will instantly decline any application with defaults on the credit report. There are other lenders who will look at the value of the default.
There are a number of specialist lenders who will accept defaults on your credit file and are still willing to offer mortgages
Precise Mortgages – Can lend up to 85% LTV. This will depend on the date and amount of your default. Precise will lend for residential, buy-to-let and bridge finance.
Pepper Money – Can lend up to 85% LTV. They have mortgage products available for people who have had a default as recent as 6 months ago. All their products are available depending on the date of the default.
Kensington Mortgages – Can lend up to 90% LTV – They have mortgage products available once the defaults have been registered over 24 months. They will ignore all communications details regardless of the age of the defaults.
Bluestone Mortgages – Can lend up to 85% LTV. Bluestone have a variety of mortgage products available and are one of the more flexible specialist lenders. They also offer exclusive deals to certain mortgage brokers (our mortgage experts are one of those)
This is just a selection of the specialist lenders; they all only accept application from specialist mortgage brokers
Using a whole of market mortgage advisor will ensure your case is placed with the most appropriate lender and more importantly at the best possible interest rate available.
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.
If the default is satisfied, you could find it easier to get a mortgage and better interest rates. Some lenders will allow satisfied defaults but will not accept unsatisfied defaults.
Not all lenders required defaults to be satisfied and do not use an actual credit score. The major factors will be the date of the default, the default amount and account type that defaulted.
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 will not 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 were 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 on my credit file?
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 do not credit score but credit profile.
The mortgage with defaults experts we work with will be able to give you the most up to date lending criteria.
Can I get a buy-to-let mortgage with defaults?
Yes, it is possible to get a mortgage with defaults for a buy to let property. As with the residential mortgages each lender will have different criteria and interest rate will be higher. To read all about buy to let mortgages click here.
Can I get a mortgage with defaults in Scotland?
Yes, the mortgage advisors we work with are vastly experienced in arranging mortgages with defaults in Scotland. Generally, mortgages with defaults in Scotland follow the same principal as the rest of the UK.
To access the absolute best deal for your mortgages with defaults, contact us today.
Speak to a mortgage with defaults advisor.
There are many lenders available ranging from high street to specialist lenders. Most people go to their own bank, get declined or cannot borrow what they need. However, just because one lender has declined you, do not give up.
Our mortgage with defaults experts will look at each case before deciding which lender is right for you and your individual circumstances. Furthermore, 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 mortgage with defaults 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 best deals available.