Can I get a mortgage with defaults?

The short answer
is yes, it is possible to get a mortgage with
defaults with the right lender. However, this will come down to a number of
factors including;

• Registration
  date of the default
• Default
  amount
• Type
  of account defaulted
• Deposit
  levels and loan to value

Getting a
mortgage with defaults requires extra care and attention, the last thing you
want to do is have lots of failed mortgage applications showing on your credit
report.

Default registration date

With defaults on the credit file, many high
streets lenders will decline the application, however, there are a number of
specialist lenders who are set up specifically for this type of application.

It’s worth noting that some high street
lenders would still potentially lend, and this is where using a bad
credit mortgage broker would certainly
help.

Most specialist lender don’t credit score,
instead opting to credit profile; they would be looking at the date the default
was registered, the more historic the defaults the more lenders would be
willing to consider an application.

Each specialist lender has their own criteria regarding
defaults, and are not always available for the general public to apply directly
– so you will need to use a mortgage broker.

Default amount

The value of the defaulted account will remain
on the credit report even if this has now been paid and satisfied. Some lenders
will look at the amount of the default, while other lenders have no maximum
monetary value and look at the registration date alone.

Each lender has different criteria, if the
default is relatively low then some lenders will totally ignore it, whereas
other lenders have a maximum default balance amount they will accept.

Type of account defaulted

The type of account defaulted can make the
difference when it comes to applying for a bad credit mortgage; for example,
defaults on phone bills and mail order catalogues are totally ignored by
certain specialist lenders.

How much can I borrow if I have defaults?

Every case is assessed on its own merits,
typically it’s a multiple of your salary or if it’s a joint application both
salaries.

The older the defaults, the more chance there
is of using a high street lender. High street lenders will tend to offer better
affordability than specialist lenders – the reason is the interest rate with a
specialist lender is higher.

Affordability is vastly different from lender
to lender, so your mortgage expert will be able to get you the maximum
borrowing for your circumstances.

How soon after a default can I get a mortgage?

It is it possible with certain lenders to be
as little as 1 month as some lenders ignore certain defaults. If you have one
of those defaults, such as a defaulted mobile phone contract, by using the
right lender you won’t be too adversely affected by the default.

As a more general rule of thumb, it would be a
minimum of 3 months – especially if the default was over £500 and not
satisfied. Again, this will depend on the lender being approached.

If the default was over £500 and registered
within the last 12 months, you would need to use a specialist lender, with deposit
levels typically starting around 15%.