Can I get a mortgage with a default?

If your mortgage application has been declined because you have a default on your credit record, it’s still possible to get a mortgage with a default, with the right help. While many high street lenders refuse to offer mortgages to people with a recent default or poor repayment history, there are some specialist lenders which have a greater appetite for risk and may be more willing to lend.

Because there is more risk involved for the lender if you have a defaulted credit account, you may not be able to access the best rates and may even need to come up with a larger deposit.  But, with the right help, you can still access the lenders which offer more favourable deals and terms to borrowers with a less than perfect credit score.

What is a default?

A default is a mark that can go on your credit reports for missed payments and can have a significant impact on your credit score.
When it comes to your credit record, a default differs from both late and missed payments. A late payment is recorded when a bill is paid after the date it was due. A missed payment is recorded if you fail to pay the bill entirely.

A default on your account occurs only after you have missed several payments, usually between three and six. When this happens, the lender will send you a written notice, which you have 14 days to respond to. You can request more time to pay, or a revised payment plan if you are struggling to afford the repayments, but the creditor could also close your account and demand that you repay your debt in full, and look to get a court order to enforce it.

If you have a default recorded on your credit account, it will remain on there for six years, meaning that every time you apply for any type of credit, such as a mortgage or loan, during that time, your lender will see it when they carry out their usual credit checks.

How do bad credit mortgages work?

Bad credit mortgages are just like regular mortgages, but because there is more risk involved for the lender, they tend to come with higher interest rates and stricter limits on how much you can borrow. That’s because the risk is mitigated by the higher interest rates and larger deposit you pay.

If your credit score is high, lenders will view you as less of a risk and so your chances of getting a regular mortgage, with lower interest rates, approved are higher. If you have a low credit score – because you have a default on your credit record, for example – lenders will view you as a riskier prospect, meaning your mortgage options narrow.

There are many types of bad credit mortgages available, including fixed, variable, and discounted rates. The interest rate you’ll pay, and the amount you’ll be able to borrow will vary from lender to lender and will depend on your credit score. 

How do I get a mortgage with a default?

If you have a default on your credit account, the way you respond can be crucial to your future mortgage options. Honesty is the best policy. If you are upfront with the reasons why you defaulted and can prove to your lender that you can still borrow and repay credit responsibly, it will stand you in good stead.

Repaying the defaulted amount as quickly as possible will help, as will renegotiating repayment terms with your lender and then sticking to the new plan. Also, the longer the default has been on your record, the less impact it will have on your chances to successfully access a mortgage with a competitive rate.

And after six years, the default will be removed from your credit record and you can start to rebuild your credit score. So, it is possible to get a mortgage with a default, but you’ll need to demonstrate to the lender that you can afford the repayments and can manage your finances sensibly.

Reducing your monthly outgoings and not taking on any new debt is a good place to start. The more you can save for a deposit the better, too.

Contact us for more information about getting a mortgage with a CCJ

My Mortgage Pro is a professional mortgage information service. While we don’t give advice, we aim to provide you with simple, jargon-free, no-nonsense information about successfully applying for a mortgage with a default to help you make the right choice. We can also connect you with a specialist mortgage broker from our parent company James Alexander FS who are authorised and regulated by the Financial Conduct Authority, who will provide advice tailored to your specific circumstances and help you find the right mortgage, fast.

To find out more and request a call, fill out the form below.