Mortgage With A Default
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What is a default?
A default is when a lender closes your account due to missed payments.
Having a default on your credit file tells other providers that you have broken the terms of a credit agreement. It makes it harder to borrow.
How to find out if you have a default
Check your credit report.
The UK has three main credit referencing agencies: Equifax, Experian, and TransUnion. They hold information about you, like your name and address, who you’ve got credit with, how much you’ve borrowed, and whether you’re paying your creditors back on time.
Lenders will check your details with one or more of these companies when you apply for a mortgage.
You can sign up to each of the credit referencing agencies above. Alternatively, we like Check My File. It pulls data from all three agencies and displays it in one place. Check My File is free for the first 30 days, then £14.99 a month afterwards. You can cancel the subscription at any time. If you sign up using our affiliate link, we may receive a small amount of commission at no additional cost to you.
Defaults usually appear as D markers in the payment history section. On Check My File, this is a black letter D instead a black circle.
If you need help understanding your credit report, contact us.
How long does a default stay on a credit file for?
Six years from the date of registration.
Getting a default removed from your credit file
If you believe a default marker is on your credit file by mistake, you can appeal it.
To appeal a default, you should contact the lender, ideally in writing. You may need to provide supporting evidence to back up your claim.
You can also file a dispute with the credit referencing agency.
Will a default be removed if I pay it?
No, it will stay on your credit report for six years from the date of registration regardless. But it will show as settled, so other credit providers know you’ve cleared the debt. This can put you in better standing with them.
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Can you get a mortgage with a default?
Yes, it’s possible to get a mortgage with a default, or even multiple defaults.
The older the defaults are, the better. For example, some lenders can consider applications from people with defaults as long as the defaults are over three years old.
In some instances, the monetary value of the default, and whether it has been paid off or not, can also make a difference. Some lenders might also ignore defaults from certain providers, e.g. telecommunications.
Multiple very recent defaults may indicate current problems with managing money, so lenders are less likely to consider you if you have these.
Why do lenders not like defaults?
A default tells lenders that you’ve missed pre-agreed payments for several months. Their concern is that you might do the same with a mortgage. Lenders are entitled to repossess your home should you stop keeping up repayments, and they don’t really want to do that.
How to get a mortgage with a default
The most important thing is to get a copy of your full credit report before applying. That way, you and your mortgage broker can see exactly when any defaults were registered, who you defaulted with, how much the defaults were for, and whether or not they have been paid back.
A broker can use this information to work out which lenders might be able to consider lending to you.
Does a default affect what you can borrow?
In a roundabout way.
Defaults impact which lenders might accept you. If some won’t, you can’t borrow anything with them.
There are specialist lenders who cater for people with defaults and other adverse credit. The interest rates are typically higher than with mainstream lenders, but that isn’t to say what you can borrow is significantly less.
What deposit is needed for a mortgage with a default?
It depends. One small default five years ago on a mobile phone contract might mean a smaller deposit compared to multiple defaults totalling thousands of pounds in the last three years.
It’s important to note that defaults aren’t looked at in isolation. Lenders will look at your credit profile and affordability as a whole.
If you need a specialist lender because of your credit profile, the smallest deposit you need typically starts from 10%.
Can I remortgage with a default?
Possibly, yes.
If you are currently with a high street lender but would have to move to a specialist lender due to your default, a rate switch with your current lender may be a better option if they allow it.
In this scenario, we would recommend contacting a mortgage broker (like us!), who can provide personalised advice for your situation.
How can The Mortgage Store Chorley help get a mortgage with a default?
At The Mortgage Store Chorley, we understand that financial setbacks can happen to anyone. If you have defaults on your credit history, we are here to help you secure a mortgage.
Our experienced mortgage broker works with clients who have less-than-perfect credit. We offer personalised solutions, access to a variety of lenders, and expert guidance to navigate the complexities of the mortgage process. Let us help you turn your homeownership dreams into reality, despite your past financial challenges.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
