Late payments and defaults are one of the most common reasons that high street lenders decline mortgage applications. The good news is that specialist mortgage lenders may take a more favourable view particularly if your credit problems are in the past and you've kept up to date with payments since.
In this article
Can I get a mortgage with a default?
There are several specialist mortgage lenders that will consider applicants with both satisfied and unsatisfied defaults. Each lender will carefully examine the severity and length since the adverse credit was recorded on your credit file.
For example, a late payment on a mobile phone contract may be considered less severe than a default on a secured loan or mortgage. That's why it's important you contact a specialist mortgage broker like Premier Mortgage Services to discuss your individual circumstances.
How do I get a mortgage with defaults?
It's important you obtain a copy of your credit file before you make an application. Several applications in a short space of time can also hurt your credit score and a mortgage broker can help place your application with the most appropriate lender usually on the first occasion.
In some cases, we may recommend delaying the mortgage application to allow time for the default to reach a milestone or drop off your credit report entirely, which is six years from the date the default was registered.
Once the extent of the adverse credit is known, a preliminary application known as an Agreement in Principle is submitted to the lender. If approved, a full mortgage application is submitted.
Do my defaults have to be satisfied to get a mortgage?
Not necessarily although it will improve your chances. Specialist mortgage lenders are more concerned with the type of default and date it was registered than whether is was satisfied.
How much deposit will I need if I have defaults?
The amount you will need to put down as a deposit will depend on how old your defaults are. If they are over three years old, a deposit of 5-10% may be sufficient, however a larger deposit of 15% or more may be required if the default was registered a year ago.