How To Get a Mortgage With a Default

In modern-day life, defaults happen all the time and are more common than you might think. All it takes is a few missed payments on a debt, the lender has to close the account, and a default gets recorded on your Credit Report. This typically happens after three to six months of non-payment and can apply to anything from a utility bill, personal loan or a mortgage. 

But while a default can temporarily damage your credit score, it doesn’t have to spell the end of your home-buying journey, and the mortgage you need could still be within reach. In this guide, we’ll show you how this is possible.  

Can You Get a Mortgage with a Default?

Yes, it’s possible, but for this type of adverse credit, you’ll stand a much better chance of getting the mortgage you need if you apply with a specialist lender who’s prepared to look beyond just your credit score and consider the wider picture. 

While most high-street lenders are more cautious and will likely see a default as an immediate red flag, specialist lenders often take a more flexible approach. They’ll look at:

• When the default was registered

• Whether the default has been paid off (satisfied)

• The amount involved

• The number of defaults on your credit file

• The type of account you defaulted on

• The reasons behind the default
  

The older the default and the lower the amount, the better your chances. Even if your default is recent or unsatisfied, there are still mortgage lenders available who could consider your application. 

Specialist lenders don’t really have much of a presence on the high street, so the key here is to work with a mortgage broker - like us! - who know who they are and where to find them. 

How Do You Find Out if You Have a Default?

To check for defaults, you’ll need to review your credit report. You can do this for free using one or more of the main Credit Reference Agencies (CRAs): Experian, Equifax, or TransUnion.

Alternatively, you can use a credit report service like Checkmyfile*, which provides a combined report and score based on information from all three CRAs.

Your credit report will show any defaults, including the date registered, the amount owed, and whether the default has been marked as satisfied. It’s also a great opportunity to fix any errors or remove any outdated information and see where you stand before applying.

*When you click through to our affiliate links, we may earn a small commission. We only recommend sites we trust and believe in. 

How It Affects Your Mortgage Application

A default could be seen as too much of a risk for some mortgage lenders, but for others, it simply means digging a little deeper to find out more. Here’s what they’ll want to know: 

• Age of the default: The older, the better. Some lenders could even ignore defaults that are over 3 years old.

• Is it satisfied? Paid defaults are definitely viewed more favourably.

• Amount of the default: Small defaults (typically under £300) may be disregarded by some lenders.

• Number of defaults: One is easier to understand and accept than several.

• Type of default: Defaults on mobile bills or mail-order accounts are considered less serious than those on car finance or mortgages.

• Why did it happen? Context matters for some lenders if there’s a legitimate reason why the default happened, like an unexpected redundancy or illness.
  

So, as you can see, not all defaults are viewed with the same level of concern by all mortgage lenders and, as a result, the potential impact on an application can vary depending on their status. 

Specialist lenders in particular will be your best chance of getting the mortgage you need, but it might mean slightly higher interest rates and deposit requirements.

Which Mortgage Lenders Accept Defaults?

Specialist lenders will be your best chance of getting the mortgage you need, rather than high-street lenders whose acceptance criteria can be more rigid. It might mean slightly higher interest rates and deposit requirements, but they’ll be more willing to listen to the story behind the credit score. 

As most specialist lenders tend to work only through intermediaries, you’ll need some help from a mortgage broker who knows how to find the right one to deal with this type of situation. 

This is where we come in! 

Through our sister brand, Haysto, we’ve made mortgages possible for thousands of people with a whole range of complex mortgage needs, including those with defaults recorded on their credit history. 

We’ve done this by building close working relationships with many of the U.K.’s most respected specialist mortgage lenders, such as Kensington Mortgages, Aldermore, Bluestone Mortgages, United Trust Bank and West One Loans. 

All of the above lenders (and several others) will happily consider applicants with defaults on their credit file. Rather than adopt a ‘computer says no’ approach, applications are reviewed on a case-by-case basis by a real person, who’ll look at the whole picture and not just your credit score. 

How to Boost Your Chances!

There are several proactive steps you can take to give yourself a better opportunity of getting the mortgage approval you need with a default on your credit file. 

Here’s how to take charge of your mortgage journey:

• If you haven’t already, pay off any outstanding debt connected to the default

• Get a copy of your credit report and make sure it’s accurate

• Register on the electoral roll—it helps lenders confirm your current address

• Make sure you keep on top of all regular bills and they’re paid on time

• Hold off on any other new credit applications for now

• Save up for a bigger deposit—it gives you more lender options

• Work with a broker who gets how lenders tick when it comes to this type of adverse credit issue