Can I Get a Mortgage with a Default?

What am I eligible for?

Every lender treats defaults differently, but below are the most common things they’ll look at:

• • When the default happened: The older the default, the less of a problem it will be. More lenders are open to defaults over 2-3 years old. Recent defaults can make things more difficult.
  • Whether the default has been satisfied: Most lenders prefer that the default has been paid off. Some require it before approval, others don’t mind either way.
  • How many defaults you have: Some lenders set limits, others don’t. It varies widely.
  • The number of defaults: Some lenders have caps on how much they’re willing to accept, either individually or in total.
  • What you defaulted on: Sometimes, lenders consider some defaults more serious than others, for example, mobile phone contracts or utility bills.

• Any other adverse credit: Having defaults in combination with other credit issues, such as CCJs, missed payments, or a debt management plan, will significantly affect how lenders assess you, but it’s still possible with the right approach.

In addition to this

Things can become a lot more complicated with lender underwriting policies when you have a default. Extra scrutiny gets applied, and minimum thresholds can be increased due to the perceived risk. For example:

• Deposit requirements may be higher: While borrowing 90% or even 95% is still possible, it can become much more difficult.
• They will care more about how much you earn: Some lenders will lower their minimum loan-to-income ratio threshold.
• They will care more about your type of employment: Even if a lender is comfortable with your defaults, they may be much more cautious if you’ve recently changed jobs, are self-employed, a contractor or earn commission-based income, for example.
• The type of mortgage you want: Different types of mortgages have different criteria, and not every lender offers them all. Defaults can further limit these options. Remortgaging can be less problematic than buying to let or using a government scheme, for example.

Lenders don’t always publicly share these quirks with mortgage advisors, never mind borrowers!

Lenders’ minimum thresholds can change regularly depending on current attitudes to risk. This can often lead to last-minute setbacks, where things seem to go smoothly until an unexpected rejection, causing headaches, chain-breaking, and sometimes losing out on a property.

Don’t panic

Yes, mortgages can be a minefield, and getting the best deal can be a bit like finding a needle in a haystack. But there really are lenders that will consider all types of situations.

There are experts out there with deep daily experience in all types of bad credit mortgages, including defaults. Because they speak to and deal with these lenders every day, they already know what issues, if any, are likely to come up.

This is why we exist

Every single person is unique, and all lenders are different. The mortgage industry doesn’t vet for expertise. This is why we take a channel-expertise approach to mortgage advice.

You can get all the clarity you need from an OMA bad credit expert.

Because they help people with bad credit every day, they can quickly establish the best lenders who will give you a mortgage, what the requirements will be, and at what rates.

Approximately 35% of lenders in the market can only be accessed via a qualified advisor; this percentage increases further if you have a default. Using an expert who knows which rates you really qualify for is the only way to ensure you get the best deal and avoid any nasty surprises.

You’ll probably be pleasantly surprised at how low your repayments can be. There’s no downside to checking – and you’ll be protected by our guarantee!

What to do next if you’ve been declined or told no elsewhere

It can be really frustrating, especially if you’ve found a property, but it doesn’t mean there aren’t plenty of options available to you.

People regularly come to us after being told no, and while approval is never certain, we usually succeed where others couldn’t.

In some cases, our experts have even managed to secure a mortgage with the same lender that rejected them previously. This is because they were able to present their case in the best possible light to the lender.

The reality is, just because an advisor is qualified and trying their best doesn’t mean they’re equipped to get you the best outcome. Many people are told they can’t get a mortgage when that’s not true, and they miss out because of it.

This is why we have our approval guarantee. 

The one-size-fits-all model doesn’t work for everybody, and the right expertise can really make all the difference.

If your situation is more urgent due to a deadline for approval, choose the express service and let us know your situation and how urgent it is. If you’re not in any major rush, go for a second opinion.

Once you’ve made your enquiry, try to gather any information from the lender about the specific reason you were declined.

Sometimes the story behind the default can make all the difference

Sometimes it’s not just about what’s on your credit file, it’s about why it happened.

In certain circumstances, certain lenders will take a case-by-case view on things and, provided there is an acceptable and reasonable explanation, a good advisor will be able to turn things around by presenting your case in the best possible light.

How to improve your chances of success

Here are some of the things you could do to improve your options:

However, do so with extreme caution…

What kind of rates will I be looking at?

If you’re early on in the research process and just want a rough idea of what rates and costs you might be looking at, we’ve built our comparison tool just for you.

It allows you to compare mortgages specific to your situation from high street lenders like Nationwide and Halifax; as well as specialist lenders like Bluestone, Accord and Kensington. You can even view each lenders specific policy wording.

Check eligibility, lenders and rates

A powerful starting point – but not the full picture

The tool is built combining data from the same tools many mortgage advisors use. In fact, it’ll likely tell you more than most generalist brokers could without hours of digging.

But it’s still just a tool – and it can’t guarantee acceptance.

Be aware that:

That’s where our experts can make all the difference. They’ll look at your whole picture, anticipate issues, and guide you to the best possible outcome – often spotting risks or opportunities a tool can’t.

You can find out more about our comparison tool here.

Can I successfully apply without help?

You can probably get accepted for a decent deal if your situation is very safe and straightforward to a lender, apart from a single, small, satisfied default from 5 or more years ago. Although you’d be sensible to still get a quick, expert opinion first.

Your chances of getting a great deal without help drop significantly with each additional year of recency, with defaults under 2 years old becoming particularly tricky. Just because you can get a mortgage on your own doesn’t mean you’ll get the best deal – or avoid setbacks along the way.

If you’re in any way not sure, the cost of guessing wrong can be high: rejections, delays, chain breaks, and higher costs.

Our experts can spot things in one call that can take others weeks to figure out. If you’ve found a deal already, there’s no downside to getting a second opinion.

Read more 👉: “Do I even need mortgage advice?“