Can You Get a Mortgage With a Default?

A default is a term used in finance, for when a credit agreement has been breached.

If you cannot make your payments on time or do not pay the correct amount you owe, you may be issued a default notice by your creditor. Once this is applied, your credit file will likely be impacted.

You can achieve what is called a “satisfied default”, by paying off the debt attached to the default. The sooner you pay it back, the better it will be for you.

Can I get a mortgage with a default?

Of course, your credit file is very important when obtaining a mortgage. The better your credit history is, the more likely you are to successfully obtain a mortgage.

In having a default to your name, you are showing the lender that you are unreliable with your monthly repayments and are a risk to the lenders security.

This isn’t to say that you absolutely cannot get a mortgage with a default, as with the right help from a specialist mortgage broker, you may be able to obtain a mortgage with a default to your name.

Having a satisfied default will increase your chances, as although you will have a recorded history of missing monthly payments, you are showing that you are proactively wanting to improve your credit file.

Another positive point to look at, is that a lender will be more inclined to review the date the default was issued, over whether or not you have satisfied your default.

If it is a recent default, you may be declined. If the default was 5 years ago, the lender may be a lot more likely to accept your mortgage application. This isn’t always guaranteed, however, so it depends on the circumstances and the mortgage lender.

What impact does a default have on my mortgage application?

Having a default will mean that you are limited in the lenders you will have access to. Not every mortgage lender offers specialist products to applicants looking to obtain bad credit mortgages.

Luckily for anyone in a similar situation, we work with an extensive panel of mortgage lenders, with a good portion of those lenders offering products to applicants with a default.

The downside is that whilst there may be mortgage lenders who are willing to accept you for a mortgage, you will generally end up paying a much higher rate of interest early on.

Once you reach the point of remortgage, you may be able to find a better deal with a more favourable rate of interest.

Does the type of default make a difference?

This varies from lender to lender. If you have been given a default on a mobile phone payment, some lenders may be more lenient with this.

On the other hand, if you have been given a default on missed car or mortgage payments, this will be seen as a lot more serious in the eyes of the mortgage lender.

The vast majority though will see all defaults equally though, no matter what the reasoning for the default is. At the end of the day, it’s a indication that you may be unreliable with your payments, which is not what a lender will want to see when looking to lend such a large amount of money.

What if I’ve not satisfied my default?

If you have not satisfied your default, your options will be even more limited than they already were, but you may still be able to obtain a bad credit mortgage.

As touched upon above, lenders are more likely to take a look at the date the default was issued, over whether or not you have paid it back. If the default was issued years prior, you may have a higher chance of being successful, than having a default that was issued last week.

How long will a default remain on my credit file?

A default will typically remain present on your credit file for 6 years from the date it was issued. The time period that this stays on your file will be the same, whether you have satisfied your default or not.

This doesn’t necessarily mean that you cannot get a mortgage during this time, as there will still be mortgage options. Speak to a specialist mortgage advisor to learn more about the options you will have available to you.

How soon after a default will I be able to get a mortgage?

There is no specific period of which you cannot obtain a mortgage when you have a default to your name, as there are still mortgage options during this period.

That being said you will be able to start improving your credit score once the 6 year mark has passed. Once your score looks a little better, you’ll have access to much better deals from a wider selection of mortgage lenders.

Tips For Improving Your Credit Score

The first port of call will be to pay off the debt tied to your default as soon as you possibly can. From there it’s a waiting game, as your default will remain on your credit file for 6 years, which will hinder your overall credit score for that period of time.

Once you have passed the 6 year mark, you can get to work on boosting your credit score. Make sure you are on the electoral roll, keep up monthly repayments, really pay attention to your finances.

Perhaps take out the lowest limit credit card available to you at your bank, only using it for essentials like shopping and paying it back in full each month. Over time, you will see your credit score improve.

Have a Default? Book a Free Mortgage Appointment

If you currently have a default and would like to discuss your mortgage options, you will need specialist mortgage advice before proceeding with any applications.

Book your free mortgage appointment today, and one of our dedicated mortgage experts will be on hand to talk through your case and see which bad credit mortgages are available to you.

Written by
Malcolm Davidson
Managing Director of UK Moneyman Ltd.
MAQ & CeRER Qualified

22nd April 2024

About the Author

Malcolm Davidson

Managing Director of UK Moneyman LTD

Malcolm is one of the UK’s most well-known and respected Mortgage Advisors. He is passionate about providing a 5* customer experience and he has also trained and mentored dozens of fellow Advisors in a career that is now in its third decade.

In addition to his day to day duties as Managing Director, Malcolm still gives out mortgage advice and feels lucky that his job is also very much his hobby.

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