Can You Get a Mortgage with Defaults?

Harry Mansell, CeMAP · Mortgage Specialist at Keyholder Mortgages · From the cases we see

Yes, it can be possible. Whether a lender says yes depends on when each default was registered, how much it was for, how many you have, whether it's been satisfied and the rest of your credit profile. Each lender sets its own criteria, which is why the detail on your file matters more than the word "default" itself.

What is a default?

When payments fall behind and the agreement breaks down, a lender can close the account and register a default on your credit file. You'd normally be sent a default notice first. The entry shows the date it was registered, the balance at the time and whether it has since been paid, and mortgage lenders see all of it when they check your file.

Does the date a default was registered matter?

Yes, it's usually one of the first things lender criteria ask about. Registration dates are the first thing we note for each default, because they can change which lenders are open to you.

Does the number of defaults matter?

Yes, it can. Some lenders set a maximum number of defaults within a certain period, while others don't set a limit at all. Where you sit depends on your own file and the lender you're applying to.

Does it matter what the default was for?

Yes, the type of account can make a difference. Criteria at certain lenders treat a default on a phone contract or utility bill differently from one on a loan or credit card. Noting down exactly which account each default sits on helps us match you to a suitable lender.

Does a satisfied default help?

Sometimes, but not always. Certain lenders want defaults satisfied before they'll consider an application, and others will accept them unsatisfied. Paid or unpaid is one detail among several, so it's never the whole answer.

Should you pay off a default before applying?

That's a decision for you, and not one we advise on. Paying off a debt affects your wider finances, and only you can weigh that up. What we do is place your case as well as we can, based on your credit file as it stands.

Do you need a bigger deposit with defaults?

Not always. Depending on the lender and the rest of your credit profile, some can lend with a smaller deposit, while others may cap the loan to value. Loan to value is the size of your mortgage compared with the property's value, so a lower cap means putting down more yourself.

Why everything should be declared up front

Because surprises are what derail applications. An underwriter will go through your credit report when the case lands with them. Anything that wasn't declared at the start gives them a reason to pause the case or decline it.

Before we submit anything, we make sure every default and any other issue on your file is set out for the lender. Having bad credit can feel like an awkward conversation, but being open about it from the start gives your case its best chance. Placing cases like this is a big part of what we do as a bad credit mortgage broker in Sudbury, Suffolk.

From experience: A first-time buyer came to us with defaults on their file. Everything on it was declared to the lender from the outset, and they bought their first home with a 5% deposit.

Finding out what's on your file

Check My File is the report we ask clients to use. This pulls your reports from the main UK credit reference agencies into one place, so you can see what lenders are likely to see. On your first call, we'll go through it together so you know exactly where you stand.

Our bad credit mortgage guide covers CCJs, missed payments and debt management plans too.

Other questions about defaults

Can you get a mortgage with defaults and a CCJ?

Possibly. More than one type of issue can narrow the options at some lenders. Much depends on the details of each and the rest of your file.

Will a default stop you getting an agreement in principle?

No, not on its own. Agreements in principle are scored against each lender's own criteria, so the lender it's submitted to matters.