Getting a Mortgage With a Default on Your Credit File

Get expert help for a mortgage with a default and find out how to secure the best rate

Firstly, have you had a default registered in the last 6 years?

Home Bad Credit Mortgages Getting A Mortgage With A Default On Your Credit File
Pete Mugleston

Author: Pete Mugleston

Mortgage Advisor, MD

Nathan Porter

Reviewer: Nathan Porter

Independent Mortgage Advisor

Updated: March 15, 2024

How we reviewed this article:

Our experts continuously monitor changes in the financial space and work closely with qualified mortgage advisors for factual verification.

March 15, 2024

We explain what criteria mortgage lenders use to assess applicants with a default on their files, how a broker can help improve your chances of getting a mortgage with this type of bad credit, and more.

Can you get a mortgage with a default?

Getting a mortgage with defaults is possible. Eligibility depends upon severity, recency, and the number of defaults on your credit file as well your general affordability (ability to make repayments). You can improve approval chances with a higher deposit, stable income/employment, and by using a specialist lender.

Lenders generally consider this to be a moderately severe form of bad credit. This means that your best chance of approval might be through a specialist bad credit mortgage lender, although the number of options available could depend on the age of the default and the circumstances surrounding it.

Why does a default make it harder to get a mortgage?

It can be more difficult because having this type of bad credit makes you a higher risk to mortgage lenders than applicants with clean credit.

This means that you will likely have access to fewer lenders and mortgage deals, and some of the ones that are available could come with higher rates and deposit requirements. But that isn’t to say getting a good deal is impossible, especially if your default occurred a long time ago and there was a good explanation for it.

Maximise your chance of approval with a broker who's a specialist in mortgages with Defaults

Get Started Phone Icon 0808 189 2301

How to get a mortgage with a default

Your first step should be to find a mortgage broker who specialises in bad credit as professional advice is vital if you have a default on your credit files. Make an enquiry and we will match you with a broker who has the exact knowledge and experience that you need.

Your bad credit mortgage specialist will guide you through the following steps to full application:

  • Preparing the documents you will need: This will include proof of ID, address, three months’ bank statements and any documentation relating to your default.
  • Downloading your credit reports: With the help of your mortgage broker, you can optimise them and improve your credit profile ahead of your application, giving you the best chance of approval and landing a favourable rate.
  • Finding the right lender and filing the perfect mortgage application: The brokers we work with have deep working relationships with specialist bad credit lenders and can help you secure the best deal through them.

We're so confident in our service, we guarantee it.

We know it's important for you to have complete confidence in our service, and trust that you're getting the best chance of mortgage approval at the best available rate. We guarantee to get your mortgage approved where others can't - or we'll give you £100*

Happy approved couple

Which lenders will consider your application?

Most lenders will consider offering mortgages to applicants with satisfied defaults. This includes well-known names such as Natwest, TSB and Nationwide. However, they will apply conditions  such as a maximum number of defaults or maximum value of them .

If your situation is more complex, for example, you have defaults registered within the last 12 months, you may need to use a specialist lender such as Together, Vida Homeloans or Accord Mortgages.

This is where using the services of a bad credit broker can be invaluable. They’ll be able to identify which lender is best placed to help, based on your own specific situation.

Have any of these mortgage lenders declined you because of a default?

Select the tiles below to continue:

HSBC
Halifax
Nationwide
Santander
Precise
Barclays
Natwest
Principality
Kensington
Other

How do mortgage lenders assess applicants with defaults?

Every lender has its own specific rules when it comes to applications containing defaults.

However, in general, this is what lenders will be looking at…

When your last default was recorded

Defaults remain on your credit files for six years, so after this point, they will not impact on your ability to qualify for a mortgage.  If you still have a default against your name, the longer ago the issue occurred, the better. However, different lenders have different criteria when it comes to the length of time it’s been since a default was registered.

Some, for example, are happy to consider an application as long as the default was registered more than six months ago. Some will insist on three years. Some, however, won’t accept any that were registered  in the last six years (i.e. until the issue  has been removed from an applicant’s record).

The table below will give you a rough idea of how the age of your default will determine the approximate number of lenders available to you.

Age of the Default Approximate Number of Available Lenders
0-3 months 40
3-12 months 50
12-24 months 59
24-36 months 64

Please note lenders mortgage terms and criteria can be subject to change. Speaking to a mortgage broker is the best way to keep track of the terms and conditions available at any given time.

The monetary value of your defaults

For some lenders, the monetary value of the default is critical. For example, there are some that won’t consider an application if the total exceeds £500 or if a single default was more than £250. Smaller defaults for amounts such as £25 are unlikely to be considered as a deal-breaker by mortgage lenders.

How many you’ve had

If you’ve had multiple defaults, you’ll typically be considered a far riskier borrower compared to if you’ve had just one.

Some lenders explicitly say they’ll only accept a maximum number of defaults within a certain period of time. For example, 4 in the last 2 years or none in the last 6 months.

Whether they have been paid off

Some lenders will only consider your application if you’ve managed to pay off all outstanding debt and the default status has been changed to ‘satisfied’ on your credit report.

A satisfied default is when you have finished paying off your defaulted debts, and the sooner you can pay it off, the better. A default (whether satisfied or not) will drop off your record after six years. Mortgage lenders prefer satisfied defaults because it shows them that, even though you previously failed to repay your debts, you’ve managed to pay it all back.

What you defaulted on

The type of debt you defaulted on can make a big difference to your chances of being approved. For example, lenders will take an extremely negative view on you if you missed multiple mortgage payments or repayments on any other type of secured loan. However, they’ll typically be more lenient if you defaulted on a mobile phone contract.

Whether you have any additional credit issues

Mortgage lenders will view your application more favourably if your financial conduct has been good since the default occurred and there are no other credit issues listed on your reports. If you have any other forms of bad credit on top of the default, your application will be more complex, and speaking to a specialist broker is advised.

Typical rates

The table below gives an idea of the typical interest rates you should expect to pay with a bad credit record.

Lender Product Details
Frosted Rates Image

Looking for more rates and deals?

We can match you with a mortgage broker who can provide you with up-to-date bespoke rates and deals from across the entire market.

Last updated May 2024

The rates quoted above were correct at the time of writing and are subject to change at any time at the lender’s discretion. Speaking to a mortgage broker is the best way to keep track of the rates available at any given time. 

How much could you borrow?

The good news is that having a default won’t directly impact the amount you can borrow on a mortgage, as this is largely based on your income and outgoings. Most mortgage lenders will cap your maximum borrowing at 4.5 times salary, although some might stretch to higher than this.

There are also lenders who may allow you to declare additional income such as bonuses and commission, or any benefits you are receiving, to boost your borrowing potential further.

How much deposit will you need?

This will depend on a lot of the factors already mentioned in this article, particularly the time that has passed since the default happened and the amount involved.

As a general guide, if the default occurred within the last 12 months and was for a small amount, the deposit required could be around 20%. If it’s after 12-24 months between 15%-20%. Beyond 36 months, between 10%-15%.

After six years (once the default is removed from your credit file) you could possibly qualify for the lowest deposits available from mortgage lenders – 5%-10%.

It would also depend upon which mortgage lender you approached as each will have different criteria for these types of applications. This is where using a mortgage broker can be very useful – they’ll be able to identify the right lenders on your behalf.

Does it matter if my default has been satisfied?

Your default does not need to be satisfied before you can be approved for a mortgage, but your chances of approval will increase if it has been settled. Fortunately, bad credit mortgage providers have the flexibility to look at other factors surrounding an unsatisfied default, such as the age of it and the reason it occurred, and can factor these variables into their lending decision.

Tamsin's Story

"Without Online Mortgage Advisor we'd have certainly lost our home"

After a bad credit rating stopped Tamsin’s mortgage application in it’s tracks, see how expert advice helped Tamsin keep her family home, and read other success stories from our customers

Read the full story
Tamsin Maclellan

Can you remortgage with a default?

Yes, although as with standard mortgages, how long ago the default occurred, the type and value will impact the rate you pay and the terms available to you for your remortgage.

Mortgage lenders will also look at your behaviour since the default and whether you’ve managed to keep up with payments or paid back any debt.

For more information see our page on remortgaging with bad credit.

Why Use Online Mortgage Advisor?

If you have a default on your record, a broker can be the difference between getting accepted for a mortgage or rejected. This is where we can help!

Our broker matching service can connect you with an expert who has specific experience helping people secure the mortgage they need after a default. They’ll know exactly which lenders to approach and all the information required for your application to give you the best chance of success – first time!

Give us a call on 0808 189 2301 or make an enquiry and get matched with an expert today for a free initial conversation.

Maximise your chance of approval with a broker who's a specialist in mortgages with Defaults

Get Started Phone Icon 0808 189 2301

FAQs

Yes, although as with other types of mortgage, a lot will depend on the size of the default, when it was registered and what type as well as if there’s any other forms of bad credit on your credit report.

Not having a history of meeting monthly mortgage repayments means you may have a more limited pool of lenders to choose from or you may be offered less favourable rates.

A default will stay on your record for six years, whether you’ve paid the debt off or not. It’ll only be removed if it was listed as an error or if you pay it off quick enough (usually within 30 days). However, you can take steps to reduce its negative impact. For example, paying it off as soon as possible so it’s marked as ‘satisfied’ on your report or adding a note to your file to explain the missed payments if you have a reasonable explanation.

About the author

Pete, an expert in all things mortgages, cut his teeth right in the middle of the credit crunch. With plenty of people needing help and few mortgage providers lending, Pete found great success in going the extra mile to find mortgages for people whom many others considered lost causes. The experience he gained, coupled with his love of helping people reach their goals, led him to establish Online Mortgage Advisor, with one clear vision – to help as many customers as possible get the right advice, regardless of need or background.

Pete’s presence in the industry as the ‘go-to’ for specialist finance continues to grow, and he is regularly cited in and writes for both local and national press, as well as trade publications, with a regular column in Mortgage Introducer and being the exclusive mortgage expert for LOVEMoney. Pete also writes for Online Mortgage Advisor of course!

Read more about Pete

Pete Mugleston

Mortgage Advisor, MD

Defaults on your credit report? No problem! Find a mortgage with a bad credit specialist

By browsing our site you consent to our use of cookies.