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Can You Get a Mortgage with a Default?

Everything you need to know about getting a mortgage with a default

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 8th October 2019 *

Defaults on a credit file are one of the most common reasons for mortgage declines with many lenders, especially on the high street where generally only clean credit applicants are approved. Because of the frequency of enquiries we receive, the advisors we work with are some of the best specialists in the UK, and successfully arrange mortgages for people with defaults every day.

Thankfully, there are several default mortgage lenders who are happy to approve applicants with all sorts of defaulted credit accounts on their file.

  • Purchase Mortgages with a default
  • Remortgages with defaults
  • Buy to let mortgages with defaults

In this article, we’ll be looking at how you can get a mortgage with a default, which specific factors could affect your chances, and how to find the best mortgage deals.

Can I get a mortgage with a default?

Yes, absolutely. It all depends on the lenders' criteria at the time of application, but generally there are several specialists who approve mortgages for people who have defaults as part of their core business.

The important thing to remember is that every lender is different – some specialise in low rates and lend to the clean credit customers on the high street, some specialise in self-employed lending, some specialise in adverse credit.

The market for adverse credit lending has grown massively since the credit crunch, and some lenders continue to relax their pass level requirements as things continue to develop.

These days, default mortgages are more widely available. This doesn’t necessarily mean it’s easy to get approved – there’s work to do and, typically, your advisor will need to understand the market inside out to get your application through, so using a specialist is paramount.

The whole-of-market brokers help customers with defaults on their credit file get mortgages every week. To get help in securing the mortgage you want, make an online enquiry or call 0808 180 2301 for a free, no obligation chat.

How to get a mortgage with a default

To establish if you can get a mortgage with defaults there are certain considerations and things you and your advisor will need to check. The following process should help point you in the right direction and work out if you are anywhere near being able to borrow or not, and if so how much you could get.

  1. Find out exactly what’s on your credit files
    If you want a mortgage with defaults on your credit file, this is by far and away the most important part of the process – we can’t stress that enough! Your advisor will only be able to establish which lenders will accept your application by defining your exact situation – mortgages with defaults aren’t often arranged through guesswork, they are complex and your advisor will need to make sure they are doing it right first time.Lenders have strict a policy, and if you have had defaults in the last 2 years, then there’s really no point in approaching one that doesn’t allow this – you need to find the ones that do. We say credit reports (pleural) because each lender uses a different reference agency, and if you have had bad credit often the reports will look very different. Sign up for all 3 reports here (on the FREE trial) and send them to your advisor for review. Remember to ensure you use a full 6 years address history when you register so the reports pick up everything in your history at every address – the lenders will find it so it’s best to be open and honest about everything so your advisor can see the full picture from the start.

    Get your credit rating

  2. Review reports and criteria
    Once you have your reports, send them to your advisor (they will likely ask for them anyway if they know what they’re doing!). If you want to review them yourself then you are looking at all the credit accounts for account type (credit card / loan / mobile phone etc.), default dates, default amounts, and any settlement dates. You may also want to check through for other issues such as late payments, arrears, and public record information (at the bottom) for CCJ’s, IVA’s, and bankruptcy information. Make a list of these from ALL 3 reports, and have them ready for your advisor to save them time, or just give them the reports to do it themselves.
  3. Make an application/enquiry
    You will then be best advised to look at the criteria overview on this page. If you fit within the default limits and have the right amount of equity/deposit, then make an enquiry and we will pass you to the best advisor to get something agreed.

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Getting a mortgage with a default

General criteria overview

The table below covers the range of lending options at various Loan to values (LTV’s). Now lending is possible up to 95% on the Help to Buy scheme even if you have defaults on your file which is an amazing opportunity for many budding homeowners to buy with a small deposit. Those with more severe defaults or more recent defaults will likely need a greater amount of deposit/equity.

Lender Maximum Loan to value (LTV) Date default was registered Date default was paid off Other adverse credit conditions Approx. rates to expect (very rough idea at time of writing)
A 95% Over 36 months ago Over 36 months ago May consider 1 or 2 missed payments in the last 24 months. 5% to 5.5%
B 90% Over 24 months ago Do not have to be paid off Can be within 24 months if satisfied more than 12 months ago. Can be ignored if they aggregate to less than £300 and are satisfied prior to application. 4%
C 85% 3 in 24 months Do not have to be paid off May consider 3 or 4 missed payments in the last 24 months. 4% to 5.5%
D 80% 0 in 48 months Do not have to be paid off 3%
E 75% 0 in 6 months (2 in 12) Do not have to be paid off 4%

Note: The information in this table is accurate as of October 2019. Criteria can change regularly so it is important you make an enquiry and speak to one of the experts who can provide you with specific, up to date advice.

Can I get a mortgage with a satisfied default?

Most people in the industry assume that repaying bad debts is important when it comes to being approved for new borrowing, but strangely this isn’t the case in the mortgage world. Yes, it will almost certainly improve your ‘credit score’ if you have satisfied your defaults before you apply for a mortgage, but it is not always essential with the more flexible lenders because often they don’t actually run a credit scoring system anyway.

Mortgages with settled defaults are slightly easier to obtain, and with the adverse lenders who credit score, some will grade your application into a certain ‘tier’ of risk. Which tier you fall into will dictate which rate you’re eligible for with some lenders. Generally, the lenders that accept defaults are really only concerned with when they were registered, not the dates of settlement, so mortgages with unsatisfied defaults are just as easy to be approved for so long as the dates of registration match up.

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Does the type of default make a difference with mortgage applications?

Basically, Yes. Lenders will interpret defaults differently depending on the type of account it was, some are deemed more severe than others. For instance, mobile phone defaults are taken with a pinch of salt by some lenders, whereas mortgage or secured loan defaults are treated even more seriously than anything unsecured.

Some lenders see all defaults the same severity, and if you have had one it’s a block mark regardless of the account type, but there is a general opinion of certain account types that tend to fit a certain order of importance:

Severity: Mortgage With:
Less Severe
Mobile phone default
Mail order account default
Utilities (gas and electric) default
Payday loan default
Credit card default
More Severe
Personal loan default
Car finance default
Lease agreements default
Secured loan defaults
Bridging loan default
Mortgage default

Mortgages with defaults and other credit issues

Getting a mortgage if you have other credit issues as well defaults can make things even harder, and will impact the lenders that'll consider you, the rate, fees, and the loan to value.

Can you get a mortgage with outstanding debt?

Typically lenders accepting of more severe credit issues will consider the less severe, so if you just have defaults you'll have more lenders to choose from than if you have defaults and other issues. It is usually looked at in order of risk to the following hierarchy (most severe to least):

Note: Payday loan use, although not strictly considered as adverse credit, can severely harm your chances of approval.

For more info on these issues then click the links here to read more, or to get specific advice make an enquiry and one of the specialists will establish the best lenders for you.

How much can I borrow if I have defaults?

Generally the adverse credit mortgage lenders are tighter on their affordability than some of the high street.

If you have clean credit you can borrow up to 5x income, sometimes more in certain exceptional circumstances. If you have defaults your max borrowing may be limited as the lenders who take on higher risk for the adverse like to minimise the risk elsewhere, hence why they require higher deposit / equity in the majority of cases.

If the adverse is over 3 years old it may be possible to borrow up to 4.5, maybe 5x income, but usually maximum loans sizes are around 4x income. Generally, the more severe the adverse, the higher the risk, and so the lenders accepting it will limit loan to income to a greater degree.

‘Income’ is also a changing concept. All lenders accept 100% of basic salary but some will only accept 50% of overtime, bonuses and other additional incomes. Some will demand 3 years of self-employment where others are happy to lend to those with 1 years trading. Some demand those in employment to have been in the same role for 12 months, some with the same employer for 12 months etc.

Max loans are also limited by other outgoings and financial commitments. Those with personal loans of hundreds per month are less able to afford the new repayment than those on the same income with no other commitments, which makes sense of course.

To establish the maximum you can borrow, you’ll need to make an enquiry and a specialist will go through it with you.

Mortgage lenders who accept defaults

There are a number of default mortgage lenders. Which ones you’ll fit with will depend on the specific details of your credit history and other wider circumstances such as deposit sources and income etc.

What’s important to remember is that all lenders have varied criteria, and will accept and decline different things. The only way to ensure you're approved is to not only use a whole-of-market mortgage advisor, but an advisor who actually knows the whole market.

There are many whole-of-market brokers with the access to every mortgage lender, but if they don’t arrange adverse credit mortgages very often then they seldom know which lenders do what.

Approaching certain mortgage lenders with defaults can result in an instant decline,depending on when they were registered and the amount of deposit/equity you have. If you approach too many of the wrong lenders the credit searches against your name can decrease your score and harm the chances of an approval.

For the best chance of getting your mortgage approved first time round, talk to one of the whole-of-market specialist brokers we work with. They have helped thousands of customers like you get a mortgage.

Call 0808 189 2301 for a free, no obligation chat and save yourself from the hassle of additional marks on your credit rating.

How soon after a default can I get a mortgage?

Lender Time since default registered Max number of defaults Max amount of defaults Max LTV available
A In the last 12 months 1 £1,500 85%
B Between 12 & 24 months Unlimited as long as satisfied before application No limit 85%
C Between 24-36 months Unlimited Unlimited 90%

*Mobile phone defaults are generally ignored.

Note: The information in this table is accurate as of the time of writing. Criteria can change regularly so it is important you make an enquiry and speak to one of the experts who can provide you with specific, up to date advice.

Speak to an expert about getting a mortgage with a default

If you have a default and want to know what sort of mortgage you might be able to get, talk to one of the whole-of-market brokers we work with. They will be happy to answer your questions and help you understand all your options.

Call 0808 189 2301 or make an enquiry. We don't charge a fee, there's no obligation and we won't leave a mark on your credit rating.

Updated: 8th October 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

Find out more about how we help people get mortgages with bad credit.

Bad Credit Mortgages