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Mortgage with defaults

Getting a new mortgage or a remortgage with a default on your credit file can be frustrating if you don’t get the right advice.

There are many reasons why you might have defaults on your credit history and sometimes they might not even be your fault. We understand how frustrating and annoying bad credit can be, especially when you’re trying to get a mortgage.

You’re not on your own, according to statistics it is projected that approximately 3.8 million households in the UK will have defaults by the end of 2022. This figure dipped during the recent pandemic but has increased recently and is projected to continue to grow with the cost of living crisis.

About mortgages with defaults

There are millions of households in the UK with defaults and other various levels of bad credit.

Getting a mortgage with a default or multiple defaults on your credit file is often far easier and cheaper than you might think. The main types of defaults that we deal with include:

  • Credit cards
  • Utilities
  • Mobile phone contracts
  • Mortgages
  • Store cards

We constantly speak to customers with defaults who are looking for either new mortgages or remortgages. Many people have either struggled or been refused a mortgage previously which is where an expert like us can help.

Most lenders will accept some elements of bad credit in your history but it depends very much on your overall circumstances. A default is viewed as the second lowest level of severity of poor credit, behind missed payments.

What is a default?

A default shows on your credit report as a ‘D’ which identifies that an account has gone in to default.

Usually you will have missed between 3 and 6 consecutive payments on an account, or have arrears adding up to that level. You can default on almost any credit facility where there is a payment profile or requirement to make payments.

A default is a notice that can be served to a borrower by a lender, for a regulated credit account under the Consumer Credit Act.

Once a default notice has been received then the borrower or account holder will have two weeks to clear the arrears, or make good the account.

A default notice will not appear on your credit report so you won’t be classed as defaulting until the default is officially recorded.

How long does a default stay on your credit report?

Once a default is registered against you, it will show on your credit report and file for six years in total.

It will also remain on your credit report whether or not it is satisfied so once you have it then it will be there for six years. If you satisfy a default then it may show on your report as ‘satisfied’ which can be positive.

If you do not maintain payments on a default arrangement then it is likely that the account can go to a County Court Judgement (CCJ).

Getting a mortgage with defaults in your credit history

If you’ve got a default on your credit report in the past 6 years then you would need to factor that in when applying for a mortgage.

A lender will assess your mortgage application based on your credit history and eligibility for the loan. This can be slightly more difficult if you have defaults on your credit record, regardless of whether or not they have been satisfied.

Most high street lenders will at least consider offering mortgages to people with defaults on their credit file. You are often better to consider speaking to an expert advisor who specialises in poor credit as they should know which lenders are best.

Some possible issues with getting a mortgage with defaults in your credit history:

  • High street lenders may refuse
  • Online mortgage brokers might not be able to help
  • Fees can be higher
  • You will usually need to explain the circumstances
  • Rates will often be higher
  • Certain deals might not be available

If you’ve applied for a mortgage in the past and been refused, don’t worry because we can usually help you.

For more information on mortgages with poor credit CLICK HERE.

Can I get a mortgage with defaults?

You can get a mortgage with defaults in almost all instances, unless there is something else that prevents you from getting a mortgage.

A default on its own should not cause your mortgage application to be declined completely by all lenders. There are some lenders that are far more flexible towards defaults and other types of bad credit.

We specialise in helping people with all types of bad credit and will be able to direct you towards the best lender for your circumstances.

If you have previously applied for a mortgage and been refused because of defaults, there are a number of reasons why this might happen. Here are some of the most common reasons why people are declined mortgages because of defaults:

  • Applied with own bank or building society
  • High street lenders (may not accept defaults)
  • Online mortgage broker
  • Non-specialist broker
  • Other credit issues
  • Income not sufficient

You should always find out the reason for being refused a mortgage and make sure that you don’t apply too many times. If you’ve applied for several mortgages then this can also go against you because of multiple searches on your credit file.

Which mortgage lenders accept defaults?

There are more than 100 mortgage lenders in the UK and this includes the high street lenders you will be more accustomed to.

We work with over 50 carefully selected lender partners that includes a number of specialist lenders for bad credit mortgages. Once we understand your circumstances then we can match you with the most suitable lender and best deals.

Some of our specialist lenders include:

  • Accord Mortgages
  • Aldermore
  • Bluestone
  • BM Solutions
  • Kent Reliance
  • Precise Mortgages

Each of our lenders has their own criteria for defaults depending on your individual needs and circumstances.

Does a default affect my mortgage application?

If you have a default that was over six years ago that is settled then the answer will usually be no it won’t affect you.

For defaults within the last six years, whether settled or not, it is highly likely that this will have an impact on your mortgage application. Some of the ways in which a default can affect your mortgage application are:

  • Higher mortgage rates
  • Fees and charges are higher
  • More financial suitability checks
  • Lower Loan-to-Value (LTV)
  • Fewer options

It is highly likely that there is going to be some elements of your mortgage application that are affected by your default(s).

You should speak to your mortgage advisor about the best options and how to make sure that you reduce your mortgage rates over time.

Mortgage with defaults over 2 years ago

A credit profile on a loan, credit card, or store card will usually show a payment history of two years on your profile.

This however does not mean that your default will only show for two years and you will be classed as having a default up to six years. Some lenders do disregard defaults that are either satisfied or that are over two years old.

This really does depend on the lender criteria and depends on whether the default is satisfied or not.

Can I get a mortgage with 2 defaults?

There are also many people that have multiple defaults on their credit profile and this is something that will also be taken in to consideration.

If you have more than one default showing on your credit report then it may have a greater impact on your ability to get a mortgage. It is more likely that you would need to apply for a mortgage with a specialist lender in this case.

Most high street lenders will have a limit to the amount of defaults that they allow and therefore your options might be limited.

Can a default stop you from getting a mortgage?

This is a difficult question to answer because everyone’s situation is different and your mortgage application is unique to you.

There are certain circumstances where defaults can stop you from getting a completely in more serious cases.

Some of the main reasons might be:

  • Multiple defaults
  • Unsettled defaults
  • Larger amounts
  • Questions about the circumstances behind the default

You should definitely check with a specialist mortgage expert before giving up trying to get a mortgage completely.

Can I get a shared ownership mortgage with defaults?

A shared ownership mortgage works in more or less the same way as a standard mortgage for defaults.

You should be able to get a shared ownership mortgage with defaults which is the same as other standard mortgages. Most lenders offer shared ownership mortgages and so then the next issue is trying to find the best deals.

If your credit history is slightly more serious and there are multiple defaults then you might need a specialist lender. Some specialist lenders may not offer shared ownership mortgages because of the potential risks and low deposit.

It is also common for shared ownership mortgage applications to have an element of poor credit, so this is not an unusual situation.

Contractor mortgage with default

As a contractor, it can sometimes be difficult to manage your finances due to unpredictable outgoings and income.

A common issue can be defaults on certain types of credit from periods of being out of work or no income. Again, this isn’t unusual and it is something that lenders will allow for in most cases when assessing suitability.

Some of the main things to consider for contractor mortgage with defaults:

  • Income and expenditure
  • Accounts history (if self employed)
  • Number of defaults
  • How long ago were your defaults?
  • Are your defaults satisfied?

Most contractor mortgage lenders will also consider defaults in your credit history, depending on your circumstances.

We specialise in helping contractors to get the best mortgage deals, regardless of their credit history.

For more information on mortgages for contractors CLICK HERE.

Mortgage specialists for defaults

It’s important to speak to a mortgage specialist that understands your circumstances and who is sympathetic to your needs.

Our team of default mortgage experts have helped thousands of customers with all types of bad credit. We know which are the best lenders for you and your family to get the home you want at a price you can afford.

Useful resources

Citizen’s Advice – Check your options for getting out of debt

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