Can You Get a Mortgage After a Default?

What counts as a default

A missed payment, an account in arrears, a default notice and a recorded default are not the same thing. An account may be marked in default after a series of missed payments and a breakdown in the agreement. A default notice is a warning used for certain credit agreements — receiving the notice alone isn’t the same as the account being recorded as defaulted. Check the status and the default date shown on your credit reports rather than relying on a letter or an app score.

A recorded default normally remains on a credit file for six years from the default date, even if the balance is paid in the meantime. Paying may change the entry to satisfied; it doesn’t normally reset the six-year clock or remove the historical entry early. If the date, balance or ownership is wrong, dispute it with the creditor and credit reference agency and keep the evidence.

Which details affect your lender options

Age and recent conduct. A recent default may restrict lender choice more than an older one. Lenders may also ask whether there have been further missed payments and whether current commitments are up to date. We won’t tell you that every lender requires two, three or six years without a default — criteria differ and change.

Amount and account type. A small phone-bill default can be assessed differently from a large default on a loan or a previous mortgage. Some lenders set limits for individual accounts, total balances or particular account types. The reason for a default may provide context, but it doesn’t override a lender’s policy or an affordability problem.

Number and pattern. Several defaults from one period of disruption can tell a different story from new problems appearing over several years. We need the dates and current balances for all entries, including related missed payments and CCJs.

Deposit, income and property. More deposit can reduce the percentage of the property value you need to borrow and sometimes broaden choice. It doesn’t guarantee an offer — lenders must still be comfortable with your income, expenditure and the property. A self-employed applicant with defaults may need to meet both the lender’s credit policy and its rules for proving business income.

Should you pay an outstanding default before applying

Some lenders require an outstanding default to be satisfied; others may consider it under particular limits. Paying can change its status, but the date of the default remains. Using most of your available cash to settle a balance could also reduce your deposit or leave too little for buying costs. We compare the lender’s actual requirement, the amount owed and the funds you have before suggesting a mortgage route. If the debt is disputed, get appropriate debt advice before deciding what to pay — we don’t resolve the dispute for you.

What should you do before a mortgage application

1. Check your credit reports for the lender name, default date, original balance, current balance and status of every entry, and whether the same debt appears under a collection agency without misleading duplication.
2. List your income, regular commitments and deposit or property equity. Keep evidence of any paid balance, an incorrect entry you’re disputing, or circumstances you’d like the lender to understand.
3. Tell us whether you’re buying, remortgaging, or renewing a deal with your existing lender — a suitable product transfer can be worth comparing for an existing homeowner.
4. Check criteria before making several applications. An Agreement in Principle is useful but doesn’t replace full underwriting — ask whether the proposed credit search is soft or hard.

There may be a fee for mortgage advice. The precise amount of the fee will depend upon your circumstances but will range from £597 to £997 and this will be discussed and agreed with you at the earliest opportunity.