Mortgage After Defaults

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Mortgage After Defaults
Mortgage After Defaults

Is it possible to get a mortgage with a default?

It’s perfectly possible to secure a mortgage with Defaults or even CCJs, so long as you approach the right type of lender. Whilst most high street lenders are unlikely to offer Bad Credit Mortgages, there are a range of independent Mortgage Lenders who will be able to help you.

When the default was registered and what led to your adverse credit history will also be considered, in order to form a more accurate idea of your overall level of financial responsibility.

Does the type of default make a difference with mortgage applications?

Although each Mortgage Lender will have different criteria to satisfy with regards to the level of acceptable issues on your credit record, there is a general sliding scale observed by the majority of lenders in terms of how severely different types of default will impact your mortgage application.

Your chances of securing a mortgage will typically be lower, the further down the list the reason for your default appears:

  • Unpaid mobile phone bills
  • Unpaid utility bills
  • Overdrafts or other bank related fees
  • Missed credit card payments
  • Missed payments on unsecured loans
  • Missed payments on secured loans (such as car finance)
  • Mortgage arrears
  • IVAs and bankruptcy

Those with IVA and bankruptcy levels of debt are least likely to be able to secure a mortgage, although when it comes to defaults and CCJs, those acquired through non-payment of secured debts are generally looked upon much more severely than those with unpaid unsecured debt.

What is a satisfied default?

A satisfied default is a default that you have repaid. Although it will stay on your credit file for the same length of time as an unsatisfied default, the fact that you have repaid the debt will be reflected.

Mortgage Lenders are more likely to consider your applications if your credit report shows that you have satisfied defaults, than those that remain outstanding.

Can I get a mortgage with outstanding debt?

Those lenders who are generally willing to accept higher levels of debt or defaults that appear at the more severe end of the scale, may also be willing to lend to those who still have outstanding debt.

As with all debt issues, this will depend on a range of other circumstances, such as how long ago the debt occurred, what the reason was for the debt, how much you owe and whether it is secured or unsecured debt. It’s important to seek advice from brokers such as ourselves with an issue such as this, as we can advise you which lenders may consider your situation.

Speak To An Expert

We provide professional, friendly and accessible advice and support throughout the mortgage application process, and are able to offer recommendations and referrals to trusted conveyancing and estate agent colleagues too.

What if I have other credit issues as well?

The more credit issues you have when you apply for a mortgage, the lower your chance of obtaining an offer. Again, this is something that will depend on the exact circumstances, so, for example, two defaults for small amounts on a mobile phone bill and a water bill may be considered, whereas a default for missed mortgage payments and a bankruptcy is much less likely to be approved.

How much can I borrow if I have defaults?

A typical mortgage applicant can expect to borrow between three and five times their annual income. Your credit score will usually influence the multiple of your income that a Mortgage Lender is willing to offer, with those with a poor credit rating more likely to achieve a loan at the bottom of the scale of multiples.

If you have defaults or other adverse credit, it can be helpful to look into improving your credit score before you apply for a mortgage. As well as increasing your loan multiple, this can also give you access to more competitive rates of interest.

How soon after a default can I get a mortgage?

This will depend on the individual lender’s criteria, however, many will consider a resolved default as soon as it is registered as satisfied. Your chances of securing a mortgage will increase with all lenders the longer ago your default was registered. After six years, both satisfied and unsatisfied defaults will be removed from your credit file, so they will no longer impact your ability to obtain a mortgage offer at this point.

How can a Mortgage Broker help?

Here at Mortgage Broker Services, we specialise in helping those applicants with a complex credit history to secure a competitive mortgage. Our current knowledge of lending criterias across the full spectrum of lenders offering bad credit options allow us to easily recommend a suitable lender for your individual circumstances.

If you have very severe credit issues, we can help put you on the path to better preparing your finances for a successful application in the near future.