If you have defaults on your credit file, you may be worried that you won’t be able to get a mortgage. The good news is that it is very possible for you to get a mortgage, even if you do have a default. However, it will likely be much more difficult.
Seeking specialist advice can help you overcome these difficulties, as well as find a lender who is best suited to your situation.
What is a Default?
A default is defined as a failure to fulfil an obligation. In essence, it is the failure to meet the legal obligation to pay back any debt or loan.
Defaults can occur on both secured and unsecured debts, such as mortgages repayments and credit card balances.
What do lenders look at when dealing with a default?
There are four main factors that lenders will consider when dealing with a default:
- If the default is satisfied (been paid)
- How many defaults you have
- The value of the default
- How long ago the default was registered
Going through a mortgage broker, such as ourselves at Barlow Irvin, will open up more options for you as we will be able to find suitable ‘bad credit lenders’.
Can you get a mortgage with a default?
Yes, you can get a mortgage with a default, although it is not quite as straightforward as it would be if you didn’t have any defaults. This is mainly because the lender will see you as a high risk applicant.
Lenders like to see that you can keep up with monthly repayments, so getting a mortgage with a default is harder than if you had a clean credit history. There are several lenders who won’t accept any kind of default on your credit file, but this does not mean there aren’t any lenders out there who will accept you.
How long after a default can you get a mortgage?
It might be possible to get a mortgage just a year after having a default, depending on the nature of it. However, the longer you wait since the default, the better your chances of achieving a mortgage.
After six years, your default will usually be removed from your credit history. This makes it much easier to apply for mortgages, as well as improving your credit rating.
How long does a default stay on your credit file?
A default will stay on your credit file for 6 years after it was registered. Even a default that has been ‘satisfied’ will stay on your report for 6 years. After this time period, it will be removed from your report.
Can you get a default removed from your credit file?
Yes, you can get a default removed from your credit file by paying the amount on time after receiving the notice. The late payment will still show on your report.
If you have any issues paying your default, you should contact the lender and ask if it can be cleared in instalments.
Can you get a mortgage with a satisfied default?
Yes, you can get a mortgage with a satisfied default. Generally speaking, your chances of being accepted by a lender will be boosted, but there may still be many high street lenders who won’t be willing to offer you a mortgage despite the loan being resolved.
A specialist lender is more likely to care about when the default happened, rather than if it has or hasn’t been resolved. This is because it is your recent credit history that bears the most weight.
How to get a mortgage with a default
The best chance to get a mortgage with a default is by contacting our experienced and knowledgeable team at Barlow Irvin. Our team has access to specialist mortgage lenders, which aren’t typically available to the public, who can provide mortgages for those with poor credit scores.
There are also a few different things you can do to help improve your chances of getting a mortgage with a default:
- Understand your credit score – The first thing you need to do is check and understand your credit score. This is the only way you’ll know how to improve it whilst having a full overview of what’s reducing your overall score.
- Make some easy changes – Next, you should move onto making some easy changes that will positively affect your credit rating. Some simple things you can do include:
- Updating your address on the electoral register
- Identifying any incorrect faults and asking for them to be removed
- Pay at least the minimum balance on your credit cards each month
- Don’t use your credit card too often
- Be honest – It’s not a good idea to try and hide any credit issues. Mortgage applications are extremely thorough, so lenders will find out one way or another. Have an explanation ready for any defaults and what you’ve been doing to try and repay them.
How much can you borrow on a mortgage if you have a default?
If you have a default, the maximum amount you can borrow will likely be limited and it will vary from lender to lender.
If the default is over 3 years old, it may be possible to borrow 4.5 – 5x your income, but the maximum loan is usually 4x. Generally speaking, the more adverse your credit is, the more risky you are viewed as by the lenders and so how much you can borrow will be limited.
Can you remortgage with a default?
Yes, it is possible to remortgage even when you have a default. The remortgaging process is quite similar to getting a mortgage the first time around, so you’ll need to pass the lenders affordability checks.
Again, you may require the assistance of our team at Barlow Irvin to help you with this as your lender options may be limited.