Can I Get a Mortgage with a Default?

A default is when a creditor chooses to close an account due to the borrower's failure to make their payments. This doesn't usually happen after a single missed payment, but rather when the borrower has failed to make multiple payments in a row. Defaults can come from missing mortgage payments, bills, utility bills, overdrafts, car finance and more.

Defaults and CCJs (County Court Judgements) usually go hand-in-hand. If you have defaults that the company cannot recover, they may request a County Court Judgement, which is the next, and very serious, step in recovering what they’re owed.

Both defaults and CCJs can make it harder for you to get a mortgage offer – but not impossible.

Defaults stay on your credit file for 6 years. This is counted from the date of the default, even if you pay it off in full. If you're applying for a mortgage any time within the 6 years following a default, mortgage lenders are able to see this when they do a hard credit check.

It’s worth bearing in mind that some lenders may ask if you’ve ever had a default when you fill out your mortgage application. This won’t necessarily affect your application with them, especially if there’s no longer any residual impact on your credit score.

Your mortgage options will be extremely limited if you want to secure borrowing on a specialist property and you have defaults on your credit file.

Getting a poor credit mortgage requires an adverse credit lender. This limits the products available to you. Lenders also have different criteria regarding different types of property and only some allow non-standard construction, again limiting the products available to you. This basically means that if you have defaults and want to secure borrowing on a specialist property, you’ll need a broker like John Charcol who can find a lender that can accommodate your credit situation and lend on specialist properties.

Specialist property types include:

• Non-standard construction - buildings with unusual construction types such as concrete walls, metal frames or prefabricated panels. These are considered higher risks because the value can drop unexpectedly and the repair and maintenance costs on the buildings are high
• Unusual flats - some flats can be harder to get mortgages for - including very small flats, high rise flats, or flats with specific cladding types
• Houses near hazards - property built near mineshafts or on contaminated land can pose a higher risk, due to valuation concerns
• Ex-council properties - houses and flats that are ex-local authority can be harder to get mortgages for, regardless of the size or location

Can I Get a New Build House with Defaults?

There are lenders willing to consider applications with defaults on new build houses. It’s best to speak to a mortgage broker if you’re looking for this kind of product.

Can I Get a Shared Ownership Mortgage with Defaults?

It may be harder to get a shared ownership mortgage with defaults on your credit report than without, as not all adverse credit lenders offer shared ownership mortgages. In a situation like this, speak to a mortgage adviser to explore your options.

Yes, applicants must declare any defaults and CCJs on their application, whether the debt is satisfied or not. If you do not declare your defaults, you could be committing fraud. This could mean that your mortgage application gets rejected and you could be prosecuted. Lenders will be able to see defaults and CCJs when they do a hard credit check on you during the later phases of the application, so there's no point in trying to hide your financial history from banks or lenders.

While credit card debts and overdrafts can make it harder to get a mortgage, they're not as limiting as defaults. Credit card debts or overdrafts will affect your affordability, so you might not be able to borrow as much from a lender. This is because lenders will calculate how much you can afford to pay on your mortgage alongside your other debts and overdrafts, though you may be able to get a debt consolidation mortgage that helps lump your debts in with your mortgage payments. If your debts are a large portion of your income, then you might be rejected.

If you’re worried about your credit history, it’s definitely a good idea to check it before you apply for a mortgage. Start by performing a credit check using one of the main credit agencies, such as Experian. This will show an overview of your credit alongside a credit score.

Although this credit score won’t be the same as the one the lenders come up with when performing a credit check, it’s a good indicator of your overall credit profile. Nonetheless, bear in mind that it won’t show a detailed history of your defaults and other problems. Look back through your financial records to get more information on this.

Getting a mortgage with a default can be more challenging and will likely affect the deals available to you, but it's not impossible. The main factors lenders will consider are whether the defaults are satisfied, how many you have, their value and how long ago they were registered.

Going through a mortgage broker will give you more options and allow you access to a suitable bad credit lender. At John Charcol, we have experience in helping people get adverse credit mortgages and we work with lenders that only operate through intermediaries. With our experience, we'll find you the best mortgage option for your situation. Get in touch today on 0330 433 2927 to see how we can help.