Mortgage with a default

About Martin Alexander

Martin has been a mortgage advisor for over 15 years. Check to see if you qualify by filling out our quick form or give us a call on 0800 195 0490. mortgage reviews

It’s very common for lenders to decline borrowers when they apply for a mortgage with a default. This is even more apparent with high street lenders as the majority of high street mortgage approvals require squeaky clean credit. This doesn’t mean getting a mortgage with a default isn’t possible. Our expert mortgage advisors regularly work with specialist lenders. Specialist lenders are more likely to approve mortgages to applicants with defaults and other credit issues.

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Can I get a mortgage with a default?

We’re often asked if getting a mortgage with a default is possible. The simple answer is yes, it is possible with the right lender and mortgage advisor.

As there are different types of mortgages and lending requirements, there are of course different types of lenders that specialise in particular areas of finance. In this case, a high street lender would more than likely decline a mortgage, whereas a lender that specialises in adverse credit would be ideal. That being said, it’s not as simple as going to a specialist adverse credit lender and getting a mortgage approved. Your chances would still be slim, especially if you haven’t prepared for your mortgage assessment.

Expert mortgage advisors that specialise in securing mortgages for borrowers with credit issues such as defaults, generally have the expertise and experience to increase your chances of being approved greatly. Having someone on your side that knows the mortgage market is vital to securing a great product.

How to get a mortgage with a default

Lenders will all have their own criteria to assess your mortgage application. That’s why it’s important to know the criteria that the said lender has. This is an area where an expert mortgage advisor would be so pivotal. Based on your circumstances, an expert would know where to place your mortgage and how.

The first thing our advisors would do is to go through your information and ask general questions such as how much you’re looking to borrow, deposit amounts and so on. Once this is all understood, advisors can then make a start on seeing what products you may qualify for.

Investigate your credit file

Knowing what your credit file contains is extremely important, especially when applying for a mortgage with a default. This is because your credit file will show you the exact details that lenders will also look for. This is paramount for a mortgage advisor, as your credit file can show exactly which lenders you may or may not be suitable for.

It’s important to remember that every lender has varied criteria when assessing a mortgage. If for example ‘lender a’ doesn’t accept borrowers with defaults in the past 3 years whereas ‘lender b’ does, our advisors would approach ‘lender b’. This is quite a basic example as lenders will have more than just this one specific criteria, that’s why it’s necessary to prepare and approach the right lender for your situation.

An expert mortgage advisor that has experience in this field will match your criteria to the best suited lender, with the aim of ticking every single box in their assessment and getting you that all important mortgage.

Speak to an expert mortgage advisor

If you need a mortgage with a default, our advisors are on hand to help. It’s very important to get your application right the first time, rather than being declined as this can further minimise your chances and delay any offers you’ve made on a property. As this is a specialist area, seek specialist advice. Going straight to a high street lender would more than likely result in you being declined. Always be honest about your credit issues with your advisor as lenders will pick up any irregularities.

Mortgage with a satisfied default?

Satisfying a default won’t make a huge impact in your quest to get a mortgage. Many borrowers assume they’ll have to satisfy past debts in order to be approved, but this simply isn’t true. Satisfying past debts such as defaults will improve your credit file as it shows that you’ve taken some financial control. As a result, this would increase the number of lenders who’d be prepared to lend to you, but this isn’t always necessary.

There are a pool of lenders who would still lend whether or not your default was satisfied. This is useful to know, especially if you need a mortgage immediately and haven’t yet satisfied your default. It’s surprising the number of people we speak to, who would have applied a lot sooner had they known this.

Satisfying a default can hold some value to some lenders, but what the majority of lenders are interested in is the date the default was registered. Our expertise would ensure the right lender is matched to your criteria. This greatly improves your chances of being approved a mortgage.

Types of defaults and their effects on mortgages

The type of default you have will make a difference in your mortgage application. Defaults aren’t treated the same, with some lenders more suited to a type of default than others. A default on a phone bill compared to a default on a secured loan are completely different in terms of severity. Some lenders will recognise the difference and assess accordingly. There are lenders that may see all defaults the same and may refuse to lend altogether.

Nonetheless, many lenders have approved mortgages whether the default was on a phone bill or a secured loan. The key here is going to the right lender that’s best suited to you. The difference between an average mortgage advisor and a great advisor, is great advisors simply know which lenders to go to and don’t leave it to chance.

I have a default with further credit issues

The more issues you have on your credit file, will increase the difficulty in getting a mortgage. Light adverse credit issues in addition to defaults, such as CCJs, late payments or being in a debt management plan shouldn’t make getting a mortgage impossible. That being said, a mortgage is still possible even with severe credit issues such as bankruptcy, IVAs and even repossession.¬†Lenders may increase rates and fees in comparison to how severe your credit file is.

Our advisors specialise in all types of adverse credit and have done for many years. If you have multiple credit issues then you’ll more than likely need a specialist advisor.

How much can I borrow if I have defaults?

If you have a completely clean credit file and no defaults, lenders usually lend up to five times your income as an industry average. Once you add defaults to the criteria, maximum borrowing becomes a lot harder. This is because borrowers with defaults are seen as a higher risk when compared to borrowers with a clean credit file.

If lenders approve maximum mortgage amounts, then they’ll usually try and minimise their risk. One way of minimising risk is by charging premium rates and fees. If your default happened a long time ago, 4 years for example, then you may still be able to get a maximum amount mortgage with some pretty good rates.

Lenders will assess your maximum borrowing capacity based on your income. It’s important to explain that income itself is a criteria that lenders assess differently. For instance ‘lender a’ may consider bonuses whereas ‘lender b’ may not. If you’re self-employed, ‘lender a’ may only need 1 year of accounts whereas ‘lender b’ may request 3 years. With yet another variable thrown into mortgage assessments, it’s clear to see why having a mortgage advisor on board can be so important.

Lenders won’t just assess your income, they’ll also assess your outgoings and other financial commitments you may have. There isn’t one simple answer to how much you can borrow as it all depends on the above. If you want a more informed answer, you can make an enquiry. Our specialist advisors can then go through the amounts your likely to be approved in greater detail.

Get INSTANT Advice.

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