Mortgage With a Default

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Author: Elliott Culley - Director & Mortgage Adviser of Switch Mortgage Finance

Can I get a mortgage if I’ve had a default?

If you have seen a default on your credit report you will probably be thinking can I get a mortgage? The answer is yes, there are many mortgage lenders that will consider you even if you do have a default. You may even be able to qualify with a mortgage from a high street bank, but if not, there are specialist mortgage lenders available to you, that specialise in adverse credit, offering good rates albeit higher than the best on the market.

Getting a mortgage with a default will depend on:

  • the size of the default
  • If it is satisfied or unsatisfied
  • When it occurred and;
  • How many you have

How long does a default last?

Normally a default will remain on your credit profile for 6 years. Even if you have satisfied it. Some mortgage lenders will take it into effect until it drops off your credit profile, whilst other lenders disregard it once 3 years has passed.

Does 1 default affect my credit score?

Yes, having a default on your credit profile will affect your credit score. Not all mortgage lenders will look at your credit score when applying for a mortgage, so if your credit score is low as a result of a default, there are many lenders that will still look at this. Do not think just because my credit score is low, I can’t get a mortgage, nothing can be further from the truth.

Will my credit score go up if I pay off a default?

Yes, it is likely your credit score will start to improve if you pay off your default. It will not be instant, and time will play a factor, as well continuing to show good signs of debt management, such as paying any other debts back on time and reducing your overall level of debt if this is applicable to you.

How much deposit do I need for a mortgage with a default?

Depending on the severity of your defaults some lenders may restrict you to needing at least 15% deposit if not more. However there are lenders that can consider from as little as 5% deposit if you fit the correct criteria. It will depend on your circumstances and speaking with a mortgage broker is advised to make sure you are fully aware of your options.

Which high street mortgage lenders accept defaults?

You may be able to qualify for a mortgage with a high street lender if you have a default. Some high street lenders will consider you if the default was registered and settled more than 3 years ago. You will also need to have a good credit score to qualify. If you plan is to have a small deposit 5-10%, then your score will need to be higher than if you have raised a 15-20% deposit.

Unfortunately there are some high street lenders that will not consider you if a default remains on your credit profile. So you will want to make sure you avoid these lenders.

How to increase chances of getting a mortgage with a default?

There are a few actions you can take to increase your chance of obtaining a mortgage with a default, which include:

  • Satisfy the default – this will give you access to more mortgage lenders.
  • Ensure you keep up with other repayments – this will show mortgage lenders the default was a blip
  • Reduce the level of debt you have if this is applicable – this shows a mortgage lender you are not over indebted and improves your credit profile.
  • Avoid multiple mortgage credit applications – you don’t want more than one application as multiple can damage your credit score.
  • Save a larger deposit – this can give you access to more mortgage lenders and a lower credit score is sometimes needed to pass with a higher deposit.  

Speak to an Expert!

elliott-culley-mortgage-adviser- director-of-switch-mortgage

Contact us today for expert advice and guidance on your unique mortgage and property needs. We will work with you on a one-on-one to basis to help you find the right solution for your needs.  

With our experience you can rest assured that you are in good hands when it comes to securing the financing you need for your property.

Should I wait until the default has dropped of my credit profile before applying for a mortgage?

You do not need to wait for a default to drop off your credit profile before applying for a mortgage. It takes six years for a default to disappear from your credit report, but there are mortgage lenders that can consider you now.

You will have more options if your default was longer than 3 years ago, however there are still options available to you if it was more recent.

Will a default stop me remortgaging?

No, a default will not stop you from remortgaging. Depending on your current situation it may be best to remortgage with your existing lender that in most cases won’t perform a credit search. However, in some scenarios, you may need to remortgage to another lender, and it is very likely this will be possible for you.

For example, you might want to raise more funds, or lengthen to term of your mortgage. You wouldn’t be able to do this without a credit search, so remortgaging in this scenario can be more difficult. However, there are many lenders that can consider you depending on the circumstances of the default.

First time buyer with a default

If you are a first-time buyer with a default, it is possible to obtain a mortgage for your first home. There are many mortgage lenders that will consider you even if you do have a default. You are unlikely to be able to get a mortgage from a high street bank, but there are mortgage lenders available to you with good rates albeit higher than the best on the market. 

mortgage with a ccj. Switch mortgage finance. Specialist mortgage broker.

To keep on top of your credit report we would suggest using Check My File, as it covers the three main credit providers, mortgage lenders will use.

It is free for the first month before a monthly subscription of £14.99 is taken, however you can cancel at any time.

Once received, ensure your credit report is accurate and investigate anything you think is not correct.

Budget and stay on top of current debt and don’t obtain new debt, before or during a mortgage application

Does the size of the default affect my mortgage application?

The size of your default can affect your mortgage application. If your default is over £500 or you have more than 1 that accumulate over £500, then some mortgage lenders will not offer you a mortgage.

If your default is over £500 you may find it harder to obtain a mortgage. However, some mortgage lenders do not set a limit on the size of the default, provided there is no more than 3 in total. If the default is more than 2 years ago and satisifed or 3 years ago and not satisified you will find some lenders will disregard the defaul regardless of the size.

There also lenders that can look at unsatisified defaults which are higher than £500.

All mortgage lenders are different, and some set higher limits, and some set lower limits. Just because a lender has a higher limit doesn’t mean the rate will be higher than a lender with a lower limit. So, it really pays to do your research to find the right lender for your circumstances.

Do I need to clear a default before applying for a mortgage?

No, you don’t need to clear a default before applying for a mortgage, however it will give you more options and can potentially secure you a better mortgage rate. However, there are plenty of lenders that can consider you even if the default remains unsatisfied.

Can I get a mortgage with 2 or more defaults?

Yes you can get a mortgage 2 or more defaults. a significant number of lenders will accept up to 3 defaults in the last 3 years. However, there are some lenders which you could qualify with even if you had more than 3 defaults. In this scenario it would depend on the size of the default as some lenders discount any default lower than £300 or if it is connected to telecommunications.

Can I get a mortgage with a 4 year old default?

Yes, you can get a mortgage with a default that is 4 or more years old. You would have access to a quite a few mortgage lenders provided this is the only blip on your credit profile.

What mortgage companies accept default?

There are many lenders that accept defaults, but the criteria and rates are different for all of the lenders. Just because you have a default, it doesn’t mean any of the lenders below will 100% be suitable for your circumstances.

  • Why Switch Mortgage Finance?

    When you have adverse credit its important you seek help from a mortgage broker. The last thing you want to do is apply with the wrong mortgage lender. This can cost you time, money in application fees and damage your credit score. A mortgage broker will know which lender your particular circumstances will suit, ensure a smooth application and get the result you wanted at the end of the process. 

Why Switch Mortgage Finance