Applying for a Mortgage with Defaults on Your Credit History

How much will defaults on your credit history impact your ability to get the best mortgage rates? This guide explores the different types of credit issues and what they mean for your mortgage prospects.

About your mortgage

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Based on your yearly income, you may be able to borrow:

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Most lenders will let you borrow 4.5 times your annual salary so, as long as you have a standard 10% deposit, you should be able to borrow this much.

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Depending on your personal circumstances, some lenders may let you borrow 5 times your salary.

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Lenders usually cap the amount they lend at 5.5 times your salary, so it’s unlikely you’ll be able to borrow more than this.

This calculator is an estimation of how much you could borrow. If you’re ready to take out a mortgage, speak to a Revolution brokers to see what options are available.

Applying for a Mortgage with Defaults on Your Credit History

Many people have a default on their credit file, and even though many high street lenders are unable to offer a mortgage to applicants with bad credit, specialist lenders are on hand to help.

The business finance broker team has put together our guide to securing mortgage lending with a default. If you need any personal support or help with your mortgage requirements, give our friendly team a call on 0330 304 3040 or send us a message to info@revolutionbrokers.co.uk.

Can You Get a Mortgage With a Default?

You can, yes. Revolution works with a vast network of specialist lenders who can offer mortgages to applicants with satisfied default.

This process will also consider other circumstances, and lenders will come to a decision about whether they can lend to you. Competitive mortgage rates are still available to applicants with adverse credit history, provided you work with an expert bad credit broker who can direct your application to the right lenders.

This process will also consider other circumstances, and lenders will decide whether they can lend to you.

For example, a default history as a standalone issue on an otherwise straightforward application is likely to be easier than a complex application with another non-standard factor, such as a timber-framed property.

What Is the Best Way to Get a Mortgage with Defaults?

The best way to work out whom to apply to for a mortgage with defaults is to work with your broker.

Our assessments help to establish your exact circumstances and steer your application towards the most appropriate lenders.

Otherwise, there are a few tips you can work through to improve your chances of mortgage approval:

Check Your Credit Reports

If you have defaults on your credit file, it is essential to access your reports and assess them for any inaccuracies or errors, which you can dispute.

Most mortgage lenders use one of, or all of, Experian, Equifax and TransUnion, so it is wise to access your credit file from each of these leading credit referencing agencies.

Some lenders have stringent criteria when it comes to lending to applicants with defaults. Still, because each credit referencing agency is different and uses their own scoring criteria, it is worth looking into all three to ensure each is up to date and accurate.

Assess Your Credit File and Mortgage Criteria

When you have your credit reports, you should share them with your broker to save time. Our team can work with you to assess the most severe issues, resolve errors, and dispute inaccuracies.

This is a vital part of the process as it enables our bad credit team to assess whether there is one default or many, how recently these occurred, and whether there are other adverse credit issues to take into consideration.

Applying for a Mortgage After Defaults

The best way to start the application process is to work with an experienced bad credit broker who can help you choose which lenders to apply to and compile your application documentation.

Lender Eligibility Criteria for Applicants With Default Credit History

Lenders all have their own eligibility criteria and may take a very different view to lending to applications with a default.

You can apply for a mortgage up to 95% LTV through the Help to Buy scheme, even if you have a default on your file, which is a lifeline for first-time buyers with a small deposit and credit issues.

Here are indicative terms as a rough idea of what eligibility criteria often apply:

 

Max LTV ratio

Default registration

Date paid off

Other issues

Appx interest rates

Lender 1

95%

36 months ago +

36 months ago+

1-2 missed payments in last 24-months acceptable

5-5.5%

Lender 2

90%

24 months ago +

Doesn't have to be paid off

If satisfied over 12 months ago, can be more recent. May be ignored if the total value is under £300 & has since been repaid.

4%

Lender 3

85%

3 in the last 24 months

Doesn't have to be paid off

3-4 missed payments in the last 24 months may be acceptable

4-5.5%

Lender 4

80%

Zero for the last 48 months

Doesn't have to be paid off

 

3%

Lender 5

75%

Zero in the last six months, with 2 in the last 12 months

Doesn't have to be paid off

 

4%

Please note that these approximate interest rates are a very rough indication, and solely an illustration of the difference between rates in different scenarios.

What Does a Satisfied Default Mean?

When a default shows as satisfied, it means it has been paid off, and your debts brought up to date. If you can repay this quicker, you should do so as it will instantly improve your credit history.

A satisfied debt demonstrates that your finances are now in a better position than when the default was registered.

Can I Get a Mortgage With Satisfied Default History?

Having a satisfied default on your credit file is less severe than one that is unsatisfied. It shows that the debt has since been repaid, so it usually falls into a less serious risk category.

In most cases, getting a mortgage with satisfied defaults isn't significantly more complex than any other standard residential mortgage application.

However, some lenders are less interested in whether a default has been satisfied as they are in assessing your eligibility and affordability. The factors are around how old the default is, rather than whether it has since been satisfied.

Factors to Applying for a Mortgage With 4 Year Old Defaults

If your defaults were six years ago, they wouldn't appear on a new credit report, and you won't have anything to worry about.

The grey area often comes with an application for a mortgage with 4 year old defaults since there is a significant variance between the lender's attitudes.

For example, some will be happy enough that you had a relatively minor credit issue some years ago, have brought your accounts back into good order, and haven't had any credit issues since.

Others have far more rigid criteria and will automatically reject any application with a hint of credit troubles - reiterating that it's crucial to work with an experienced broker who can point you in the right direction!

Can The Type of Default on My Credit File Impact My Mortgage Application?

It can, yes. Defaults will always be assessed to determine how serious it is.

For example, a default on a mobile phone account isn't likely to be considered very serious. However, a default on a secured loan or mortgage will have more impact than any other type of default.

Flexibility all depends on the lenders. Some will refuse any application with any default, regardless of why or when it happened. Others will offer more flexibility and be willing to consider a wide range of defaults.

Other Credit Issues & Mortgage Eligibility

The more credit issues you have, the more difficult it is to get a mortgage.

If you have defaults as well as other problems, it is likely that you'll be offered higher fees and rates, and need a higher deposit.

In this scenario, you should always consult an independent broker to ensure you get the best deals available.

Can I Get a Mortgage With a Default and Outstanding Debts?

Applying for a mortgage with credit issues depends on what sort of problems you have had. The less severe your debts, the easier it is to find competitive lending.

Bad credit lenders can support applications in almost any scenario, but the adverse credit issues that will come into play include, in descending order of the most severe:

  • Existing IVA
  • Discharged bankruptcy
  • Property repossession
  • Satisfied IVA
  • Debt Management Plans
  • Mortgage arrears
  • CCJs
  • Defaults
  • Late payments on unsecured accounts
  • Credit card debt
  • Low credit score

Can You Get a Mortgage With a Default Up to Any Value?

Most lenders will make a mortgage offer based on a multiple of your salary - but this depends on whether you meet the affordability criteria to start with. The requirements may be stricter for applicants with a default.

Specialist lenders will usually work with an underwriter to assess the risk of your application before making an offer.

Typically, applicants with clean credit can borrow up to 5 x their annual income, and sometimes even higher. If you have a default on your record, this multiple is likely to be lower, but some lenders will offer around 4 x your salary.

The more severe the defaults and the more recent they are, the less a lender is likely to be able to lend.

If you are self-employed, you will need to provide copies of accounts to demonstrate your income, usually for the last three years. Other lenders will consider self-employed applicants with a default provided they have been in business for one year.

Many mainstream lenders will require borrowers to have been in stable employment with the same employer for at least 12 months.

Which Mortgage Lenders Will Accept Applicants With a Default?

Many lenders will consider a mortgage application with a default, but the terms and rates offered will vary significantly between them.

Some of these lenders include mainstream banks and highstreet providers, such as:

  • Lloyds
  • RBS
  • Halifax
  • NatWest
  • Virgin Money
  • Santander
  • TBS
  • Nationwide
  • HSBC
  • Kensington

Each of these lenders will have very different criteria and will assess your application differently.

Therefore, if you're wondering can I get a mortgage with a default, it's all about working with an independent broker.

We know which lenders to apply to, who will offer you the best rates, and which lenders have the most attractive mortgage offers for applicants with defaults.

Revolution Brokers are specialist mortgage brokers with years of experience in dealing with adverse credit mortgages.

We are perfectly positioned to help you find the best lending for your circumstances.

Applying to multiple mortgage lenders is never wise because some will automatically reject your application if there is a default on your credit file.

Having hard searches leaves a mark on your credit file, so applying to the wrong lenders could worsen your credit history.

Getting a Mortgage With a Default: How Long Should I Wait?

Like so many factors, getting a mortgage with a default depends on which lenders you apply to. Some specialist mortgage providers will consider applications from three months of a default being registered.

This policy varies significantly, and each lender will want to check how much the default was for, how many times it has happened, and how long ago the creditor registered the default.

As an indication, these are some example lenders, and when they consider lending to an applicant with a default:

Mortgage provider

Time since default

Maximum defaults

Maximum value

Precise Mortgages

12 months

1

£1,500

Kensington Mortgages

12-24 months

N/A

£1,500

Buckinghamshire Building Society

24-36 months

N/A

£250 for a 95% LTV, for higher default value applicants must be employed, and not be a first-time buyer.

NB these rates are indicative and may change regularly. For up to date rates and information about applying for a mortgage with defaults, give the Revolution team a call.

Is It Possible To Remove a Default From My Credit File?

Defaults remain on your credit file usually for six years, and it is not possible to have these removed, even when they have been paid.

However, when this has been satisfied, this will be updated, which might make it more acceptable to more lenders.

Expert Support Understanding How to Get Mortgage With Default History

Suppose you have a default on your credit file and need professional support with your mortgage application. In that case, the best solution is to work with an accomplished broker such as the Revolution team.

Our professional consultants have years of negotiating competitive terms for clients with all credit history issues. They can help you identify the best possible routes to understand how to get mortgage with default history - without paying over the odds!

Contact us today on 0330 304 3040 or send us a message to info@revolutionbrokers.co.uk and we will get the ball rolling.

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The content included in our articles, blogs, web pages and news publications is based on information accurate at the time of writing. Note that policies and criteria can change regularly throughout the UK mortgage lending market, and it remains essential to contact the consultation team to receive up to date guidance. The information included on the Revolution Brokers site is not bespoke to any circumstances or individual application scenarios and therefore is not intended to be used as financial advice. The content we share is designed to be informative and helpful but cannot be relied upon to provide individual advice relevant to your mortgage requirements. All Revolution team members are fully qualified, trained and experienced to provide mortgage advice of an independent nature. We collaborate with lenders and providers who are regulated, authorised and registered with the Financial Conduct Authority (FCA). Should you require specific mortgage borrowing types, some products such as buy to let mortgages may not be FCA regulated. The Revolution team can provide further information about regulated and unregulated lending as required. Please remember that a mortgage is a debt which is secured against your home or property. Your home can be at risk of repossession if you do not keep up with the repayments or encounter any other difficulties in managing your mortgage borrowing responsibly. This also applies to any remortgage or home loan secured against your property, including equity release products.

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