How to get a mortgage with defaults

The ultimate guide!

Trying to get a mortgage with defaults can be quite tricky. A lot of mainstream mortgage lenders prefer applicants to have ‘clean credit’. But there are often more options available to you than you may think. There are so many things that can affect your ability to get a mortgage if you have a default. It’s important to understand how it all works. This ultimate guide to mortgages with defaults should help to give you the information that you need and hopefully leave you feeling a little more positive. 

We’re going to look at the following areas and questions: 

  1. Can I get a mortgage with defaults on my credit report?
  2. The different types of defaults and how they affect a mortgage 
  3. When applying for a mortgage, does it matter when the default was registered?
  4. Can I get a mortgage with multiple defaults? 
  5. Do defaults need to be satisfied to be able to get a mortgage?
  6. What if I have other credit problems, such as missed payments or a CCJ?
  7. How can I be sure of my credit profile before applying for a mortgage? 
  8. Will I need more deposit to get a mortgage with defaults?
  9. Will the mortgage interest rate be higher if I have a default
  10. How to get a mortgage with defaults
  11. FAQ quick bullets

1. Can I get a mortgage with defaults on my credit report?

Let’s start this off with some positive energy! Yes, you can get a mortgage with defaults. 

Although some mortgage providers do not allow applications if the person has defaults, there are also many lenders that do allow a mortgage application with defaults. In fact there are lenders who specialise in adverse credit mortgages.

Every situation is different. Every persons circumstances will be different. We will discuss more about how to get a mortgage with defaults below. 

2. The different types of defaults and how they affect a mortgage

Defaults can appear in many shapes and sizes and are not treated equally. Mortgage providers all view defaults differently. Depending when they were registered, how much for and even the type of company you defaulted on will make a difference to your mortgage application.  

Some lenders will ignore a defaulted mobile phone bill. But if you have defaulted on a credit agreement such as a loan or a credit card, this is typically more serious. The more mainstream lenders tend to view default as the same, no matter what it is you have defaulted on. 

The important thing here to remember that even with a default it can still be possible to get a mortgage. It is about finding the right lender for your personal circumstances.  That is where you will really see the true value of using a great mortgage broker. A good mortgage advisor will know quite quickly if you can get a mortgage or not. And most importantly, which lenders to approach.

There are still other things that can affect your mortgage application if you have a default… 

3. When applying for a mortgage, does it matter when the default was registered?

Absolutely. When the default was registered is one of the most important factors when applying for a mortgage. This is actually more important then if you have even satisfied the default (paid off the default debt). 

In the most simple terms, the more time that has past since the default was registered the better. If you have multiple defaults they will all be considered but again how long since the last default will be very important. 

When applying for a mortgage with defaults, some lenders will not want any defaults registered within the last 12 months. Others may not accept application if you have had defaults registered in the last 24 months, or 36 months. And some lenders will not allow any defaults at all. 

4. Can I get a mortgage with multiple defaults?

Yes it is still possible to get a mortgage if you have multiple defaults. However, as you can probably appreciate, it does make things a harder the more complicated the scenario. The more defaults you have, the more specialist the situation becomes. 

The type of things that will be considered are the amount of the defaults, the facility you have defaulted on, and when were they registered. 

As an example – 3 defaults showing on a credit report for mobile phones that were each registered over 3 years ago and each had a balance under £50 would be far better than a single default on a car finance in the last 24 months for £20,000. 

It is all down to the individual circumstances. A specialist mortgage broker will be able to tell you what’s possible if you have defaults and want to get a mortgage. 

If you have satisfied the defaults it can help but as we have already mentioned, when they were registered is actually more important. Defaults will stay on your credit report for 6 years, even after being satisfied. 

5. Do defaults need to be satisfied to be able to get a mortgage?

If you have satisfied the defaults it can help, but as mentioned above, when the default was registered is actually more important. Defaults will stay on your credit report for 6 years, even after being satisfied. It will always look better if you have settled any outstanding defaults before applying for a mortgage. But you may still be able to get a mortgage if you haven’t been able to satisfy your defaults.

6. What if I have other credit problems, such as missed payments or a CCJ?

With any mortgage application that involves adverse credit, the more problems you throw into the mix, the harder it becomes. Getting a mortgage if you have defaults can be tricky. It will make things more complex if you also have missed payments or CCJs. 

An expert mortgage advisor who specialises in mortgages with poor credit will be able to review your credit report and advise you on the best way forward. This could be suggestions on the things you can do to improve your credit score. Depending on how the credit reports looks, a good mortgage broke may still be able to help you straight away if you need a mortgage with defaults and CCJs. 

7. How can I be sure of my credit profile before applying for a mortgage?

We would always recommend to anyone wanting to apply for a mortgage to get access to your up to date credit report. You will need to register with a credit reference agency if you haven’t already. There are three main credit reference agencies in the UK – Experian, Equifax, and TransUnion. Experian and Equifax are probably more commonly used by mortgage lenders when carrying out their credit check at decision in principle. However, there is also a service called Check My File which allows you to see the information held by all three credit reference agencies. We suggest people try Check My File for this reason. 

There are other free services available, such as Credit Karma and Clear Score. However, they are powered by The main credit reference agencies. Mortgage lenders do not check Clear Score or Credit Karma. They are checking Experian, Equifax, and TransUnion. The free services are ok if you want a free service day to day. But when it comes to applying for a mortgage, you must use the big three to be sure of what you credit report actually looks like. 

8. Will I need more deposit to get a mortgage with defaults?

When applying for a mortgage with defaults, it can require more deposit. This will vary between mortgage lenders and as we mentioned above, some lenders are OK with defaults, others aren’t. It all depends on the severity of the adverse credit which ultimately boil down to risk. Does the application present a high level of risk or not? 

Let’s look at an example: 

If person ‘A’ has 1 mobile phone default for £45 registered 4 years ago, and person ‘B’ has got 6 defaults across loans and credits cards totalling over £15,000 it should be fairly obvious to understand how one person presents a much higher level of risk than the other. 

This is just one example of how the answer to the question ‘will I need more deposit to get a mortgage with defaults’ is not so black and white. Fundamentally, any mortgage application with bad credit may require a larger deposit. Those with the more severe or more recent adverse credit activity will most likely need a higher deposit when applying for a mortgage.

Every application is assessed on a case by case basis and varies between mortgage providers. The deposit for a mortgage with defaults on the credit report could vary from 10% – 30%. It all depends on the severity and time line. 

Your mortgage broker will be able to provide more clarity on this for you once they have been able to view your credit report and understand the situation in more detail.

9. Will the mortgage interest rate be higher if I have a default

Similarly to the previous point about interest rates, when applying for a mortgage with a default the interest rate may be higher. Again, it comes down to the severity of the adverse credit:

  • When was the last default?
  • How much was the default for?
  • What type of agreement was defaulted?
  • Have there been any other adverse credit event?
  • How much deposit does the applicant have? 

You will have probably recognised all of those points (if you have read the whole article) except for the last point – How much deposit does the applicant have? The amount of deposit can also make a big difference with regards to interest rates. This is the case no matter if you have defaults or not. Once again it ultimately comes down to risk. The higher the amount of deposit, the lower the overall risk to the mortgage company. Having more deposit can mean a better interest rate for this reason. 

When applying for a mortgage with defaults, specialist lenders categorise applicants based on the credit report. Depending on how the report looks this will influence your credit category with the lender and ultimately affect the mortgage interest rate. 

10. How to get a mortgage with defaults

If you want to get a mortgage with defaults, the first thing you should do is speak to a specialist mortgage broker. They will need to review your credit report to be able to give you the best advice. If you need a mortgage with a default or other poor credit behaviour you could waste a lot of time and end up disappointed if you don’t know what you’re doing. By utilising the service of a whole-of-market mortgage advisor you will save yourself a lot of time, and should find the best deal for your circumstances. 

Be prepared when you contact a broker by having access to you credit report. We suggest trying Check My File. 

11. FAQ quick bullets!

Yes – it is possible to get a mortgage with defaults but it will depend on the severity and when they were registered.

Yes, you can get a mortgage with other outstanding debts, such as: 

  • Loans
  • Credit cards
  • Car finance
  • Store cards
  • Furniture finance
  • Watches and jewellery finance
  • etc 

Defaults stay on your credit report for six years. 

A default can only be removed if it was a genuine mistake in the first place. Otherwise they will remain on your credit report for six years. If you have a default on your credit report and you believe it to be a mistake, the first thing you should do is contact the company that has registered it on your report. 

The short answer is no. Defaults do not have to be satisfied for you to be able to get a mortgage. 

If you are hoping to apply for a mortgage, the date when a default is registered can be very important. As a general rule, the more recent the default, the harder it will make applying for a mortgage. 

It is quite likely that you will require more deposit if you have defaults or any other bad credit behaviour on your credit report. 

If you need a mortgage with defaults the best thing to do is speak to a specialist mortgage broker. They will be able to carry out an affordability assessment based on your personal circumstances. This is a far better process to establishing how much you could borrow on a mortgage with bad credit. 

We typically recommend Check My File. You can view the information held by all three major credit reference agencies in the UK: 

  • Experian
  • Equifax
  • TransUnion
This information is essential if you want to apply for a mortgage with defaults. 
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