Getting a Mortgage with a Default

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Home » Mortgages » Getting a Mortgage with a Default

Getting a Mortgage with a Default

If you have a default registered against you this should not stop you from getting a mortgage.

We help clients arrange bad credit mortgages all the time.

So, What is a Default?

This is where you have not kept to the original terms of the credit agreement that you took out. We typically see a default has been registered when you are between 3-6 months in arears. We typically see defaults registered on:

  • Mobile Phone Contracts.
  • Credit Cards & Mail Order Catalogues.
  • Loans & Hire Purchase Agreements.
  • Mortgages & Secured Loans.

It is always best to try and satisfy the default where possible or at least come to some arrangement where you can catch up with the payments over a period of time.

Will the default show on my credit report and when will it fall off?

The two main credit agencies in England are Experian and Equifax. Lenders typically update these credit agencies every 30 days. First of all, the lender will notify the credit agencies of the missed payments you have had and then if the lender issues you with a default notice this will be updated accordingly. It will state the default amount, the default date and whether the default is unsatisfied or satisfied. Your credit report shows your data over the last 6 years, so once the registration date of the default is older than 6 years it will fall off your credit report. It is worth noting that although the default will then not show on your credit report you do still owe the money and lender can still chase you for it.

Will satisfying the default help my application?

Yes – If you have a default that has been satisfied, it shows that you had an issue in the past and managed to resolve this. Additionally by satisfying the default more lenders may be willing to consider your application for a mortgage. However there are specialist lenders who can provide mortgages to clients who have outstanding defaults and these cases are dealt with on a cases-by-case basis.

Does the type of credit that I defaulted on matter?

It will have an impact, so for example if you defaulted on a mortgage commitment this will have a bigger impact on your borrowing capacity when compared to a default on a mobile phone contract.

Where can I find out if I have other bad credit registered such as a CCJ?

You can request to see a copy of your credit report by visiting the websites of the main credit agencies which are Experian and Equifax. There is a company called CheckMyFile, who provide a single credit report which contains data from both credit agencies.

If you are looking to take out a mortgage or any financial commitment you should always check your credit profile and make sure the data recorded against you is correct.

What lenders accept defaults?

Some High Street lenders can accept defaults, however they will generally need to be satisfied, been registered over 3 years ago and you will also need to pass the lenders credit score. There are specialist mortgage lenders who offer their products through mortgage brokers who can help clients that require a CCJ Mortgage, IVA Mortgage or mortgages with other associated bad credit.

Can I remortgage with a default?

Yes – If you are looking to remortgage for home improvements or consolidate debt with a mortgage we have lenders that can accept clients that have had a default registered against them. With these types of mortgage applications more underwriting is required and we will need to know:

  • The type of default that was registered – i.e. mobile phone, loan or credit card.
  • When the default took place – Full date required.
  • Amount of the default – The larger the default the bigger impact it will have on your mortgage options.

If you are considering remortgaging to raising money for home improvements or debt consolidation, you should also explore the option of a secured loan. This is a loan which is secured against your home and sits behind your current mortgage lender. Secured loan lenders are more flexible when it comes to poor credit profiles. It is good advice to explore both remortgage and homeowner loan options to ensure you make the right decision going forwards.

Can I get a Buy to Let mortgage with a default?

Yes – We have lenders that can offer bad credit buy to let mortgages to clients. We will need to know all the details surrounding the bad credit which is why it is important to get a copy of your credit report from the start. With buy to let mortgages you will need to put down a deposit of at least 25% and the rental income will have to be enough to cover the mortgage payments plus an excess determined by the lender/regulator.

I am a First Time Buyer with Defaults – Can I get a mortgage?

We have lenders that can help. As a first time buyer you could explore a standard property purchase or have you considered these other types of mortgages:

  • Help to Buy Mortgage – This is available to First Time Buyers who are looking to purchase a new build property. You will need a minimum deposit of 5% and you can get a government equity loan for 20% (40% in London) and then a mortgage for the remaining.
  • Shared Ownership Mortgage – This is where you purchase a share of the property and then pay rent on the remaining. For example, the property maybe valued at £200,000 – you could buy 50% of the property for £100,000 and the share you don’t own you pay rent on. Regarding a mortgage some lenders can provide a mortgage which is 100% of the share amount, so you are getting a no deposit mortgage – however you will need money to cover arrangement fees.

How to get a mortgage with a default on your credit profile?

You should speak to specialist bad credit mortgage brokers such as, The Money Hub, for advice in this area. We can give you remortgage advice, clearly outline all the costs involved and tell you the process that we need to go through for a successful mortgage application. You can get in touch with us by completing the above enquiry form or call us directly.

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Getting a Mortgage with a Default FAQ’s

To get a mortgage with a high street lender you will need a good credit score, however a default will probably lower your credit score and therefore there are specialist mortgage lenders available through brokers who could help.

The deposit amount needed can depend upon how much the default was for, when it was registered and have you now satisfied this, however as a guide you will probably have to put down a deposit of at least 15%.

A default is classed as bad credit, so you will more than likely need a bad credit mortgage and these are provided by specialist lenders which you can access through a mortgage broker.

Related Information

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