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Mortgage with Defaults

It’s natural to have concerns about defaults on your credit file if you intend to apply for a mortgage. Defaults are among the most common reasons for mortgage applications being rejected. Irrespective of the strength of your application in all other areas, defaults could see you being refused by most major lenders.

This doesn’t mean it is impossible to get a mortgage with defaults on your file. It’s a case of targeting the right lenders and providing sufficient evidence of your financial status.  

Can I Get a Mortgage with a Default?

The short answer is yes, but the outcome will ultimately be determined by a variety of factors. The most important of which is the lender (or lenders) you target with your application. Where major banks and High Street lenders are concerned, there is generally no allowance whatsoever for defaults on an applicant’s credit file. Worse still, applying with a major lender and being rejected could result in further damage to your credit history.

Not all lenders take such an aggressive stance against defaults. Beyond the High Street, you will find an extensive network of specialist lenders who take a more detailed look at the specifics of the applications they receive. If you are in a strong financial position and can clearly afford a mortgage, there is no reason why your application would not be fairly considered.

How Can I Get a Mortgage with a Default?

The process of applying for a mortgage with a default (or multiple defaults) on your file is similar to the conventional mortgage application process. You will first need to consider the strength of your application and ensure you only target appropriate lenders.

1. Check Your Credit File –Look at your credit file and see if any adverse comments are showing.  The greater the damage to your credit report, the less likely you are to be accepted by any conventional lenders. Your credit score will affect your likelihood of being offered a competitive deal, along with the size of the deposit you are expected to provide.

2. Case Review and Consideration –UK Property Finance will conduct a complete investigation of your case, assessing your eligibility using your credit history and general financial status. We will ensure you have all the documents and evidence you need to support your application before proceeding.  You will be advised which lenders are most suitable and what kind of deal you can expect should your application be successful.

3. Application Submission –We will help complete the application for submission to the most appropriate lender.  UK Property Finance work with an extensive network of specialist lenders across the UK.Whatever the nature and extent of the damage to your credit history, we will do everything we can to link you with a flexible lender and secure you an unbeatable deal.

Does It Help if the Default Has Now Been Satisfied?

You are far more likely to be considered for a mortgage if you have repaid your outstanding debts. This isn’t always the case but lenders in general show greater leniency to those that have paid off their debts, as opposed to those with debts still outstanding. It is advisable to do what you can to satisfy any defaults you have as early as possible.

It however may not be necessary to satisfy your defaults to qualify for a mortgage. Lenders who accept applications from clients with defaults are generally more flexible when it comes to credit issues.

How Do Different Types of Defaults Affect a Mortgage Application?

There are various types of defaults that can appear on your credit file. Some will be overlooked by most lenders, while others could immediately invalidate your entire application. It is also possible that you may have one or more defaults on your credit file that you were unaware of.

Defaults fall primarily into two classifications – severe and non-severe. Just a single severe default could compromise your eligibility for a mortgage, whereas several non-severe defaults on your file may not affect your application.

Severe Defaults:

  • Missed mortgage payments
  • Bridging loan defaults
  • Car finance defaults
  • Default on business loans

Non-Severe Defaults:

  • Missed mobile phone payments
  • Late credit cards repayments
  • Utility bill missed payments
  • Issues with personal loans

The extent to which any of the above are considered serious or otherwise will vary from one lender to the next.

What if I Have Other Credit Problems?

The more blemishes you have on your credit file, the less likely you are to be accepted by any major lender. The nature and extent of the credit issue you have may be taken into consideration but extensive or ongoing credit problems could count you out of the running.

This isn’t necessarily the case where specialist lenders are concerned. Away from the High Street, there is a growing network of lenders for which credit rating is not a deciding factor. They evaluate each application on its individual strength. The fact that you have both defaults and other credit issues on your file may not stand in the way of your application.

How Much Can I Borrow if I Have Defaults?

The amount you can borrow will be determined entirely by the strength of your financial position in general. There are technically no limitations to how much you can borrow, as long as you are in a financial position to make the repayments.

Criteria that will be taken into account include your current income, savings, equity, the size of the deposit you are able to offer, the nature and severity of your defaults, other credit issues and so on. Each of these factors will also influence how much you can expect to repay, both in terms of interest rates and overall borrowing costs.

Which Mortgage Lenders Accept Defaults?

Targeting the wrong lenders with a mortgage application can result in further damage to your credit report. Where defaults are concerned, it is often advisable to avoid major banks and High Street lenders at all costs. Your chances of being accepted are low, which means the likelihood of credit score damage is high.

The quickest and easiest option is to work with an independent mortgage broker such as UK Property Finance who will have more access to flexible lenders. Lender appropriateness is something that must be assessed on a case by case basis.

We consider every aspect of your case and requirements before considering deals from an extensive panel of specialist lenders. You will be guided through the entire application process from the initial enquiry through to completion. UK Property Finance offers an obligation-free consultation to discuss your requirements or answer any question you have on mortgages with defaults.

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Last Updated: Apr 3, 2020 @ 2:50 pm
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