Can I get a mortgage with a default?
The answer is – yes you can, but there are a number of other things that will need to be taken into account.
Mortgage lenders make decisions on approving customers based on a number of things; the type and status of your current employment and employment history, your 3 year address history, the amount and frequency of your income, how much your outgoings are and the level of any debt you might have as well as the most important factor – how much deposit you are able to provide.
If you have any defaults within the last 6 years this doesn’t mean you can’t get a mortgage – it just means that we need to look at different mortgage lenders that allow for this type of scenario, who will happily accept an application, with help from Shaw Financial Services to make sure it’s being done properly.
A number of factors will come into play.
1. When was the default registered?
2. Is the default on secured or unsecured borrowing?
3. How many defaults are there in total?
4. What was the value of the defaults?
5. Has the default been satisfied (paid off)?
6. What was the reason for the default?
Remember, if your default is older than six years ago it won’t appear on your credit file. It’s much simpler to get approved for a mortgage if your default was older than three years, compared to one within the past year. However there are lenders that will accept people for a new mortgage where the default hasn’t been satisfied, but the interest rates can be higher.
As a rule of thumb you’ll typically need a bit more deposit – 10/15% upwards. If the default is recent the bigger deposit level you’ll likely need (20-25%), and the longer ago the smaller deposit you’ll need.
The smaller and longer ago the default, the easier it will be to get approved for a new mortgage, however if you have multiple defaults this can also cause issues; for example if you had 3 defaults that totalled £499, this would be looked at differently to having one default at £499 as the credit file will show that you have been unable to maintain 3 separate credit accounts rather than just one
If you’re looking to get a mortgage and you’ve had a default then it’s best to speak to an experienced mortgage broker like us at Shaw Financial Services to talk through the options that may be available.
Your home (or property) may be repossessed if you do not keep up with repayments on your mortgage
