Lenders will often decline applicants wishing to secure a mortgage with a default. High street lenders, in particular, have very stringent requirements, and a clean credit history is a common feature of their criteria. This isn’t to say that there is no way to get a mortgage with a default. With the help of the expert mortgage advisers at Think Plutus, you can find specialist lenders who are more likely to approve your application, even with defaults and other issues with your credit history.

Can I get a mortgage with a default?

The question of whether it’s possible to get a mortgage with a default is one of the most common we get asked. The short answer is yes, but you have to find the right lender.

There are different types of mortgages and lending criteria, so it stands to reason that there are different types of lenders. Certain lenders specialise in specific areas of finance, and in the case of mortgages with a default, a lender with a specialism in adverse credit would be a better option than a typical high street lender. However, you should not assume it will be easy to get a mortgage with a default, even with a specialist lender. Your chances will still be quite slim, particularly if you haven’t made adequate preparations for your assessment.

If you are a borrower with credit issues like defaults, you will need the experience and knowledge of an expert mortgage adviser to maximise your chances of being approved. Having all that knowledge of the market in your corner is essential to get that challenging mortgage application approved.

How to get a mortgage with a default

Every lender has their own requirements during an assessment of a mortgage application. This is why it’s crucial to gain a strong understanding of your lender’s criteria before you submit an application. The input of a mortgage expert at this stage could make or break your application. With their knowledge and experience, an adviser could look at your circumstances and know where and how to place your mortgage.

Our advisers would start by scrutinising your information and asking a few general questions like how much you have for a deposit, the amount you’re seeking to borrow, and so on. Once they have gained a good understanding of your circumstances, they will begin searching the mortgage market to identify products that you might qualify for.

Your credit file

It’s important to know what’s contained in your credit file when trying to secure a mortgage with a default. Your credit file contains precisely the details that lenders will be looking for. This is pivotal for mortgage advisers because your credit file will enable them to determine whether or not you will be suitable for the lenders they focus on. There are some good tools online, like Check My File, where you can view all your credit reports in a single place.

Every lender has a range of criteria for mortgage assessments. For example, one lender may not accept applicants with a default in the last 3 years, while another does. In this case, your adviser would approach the latter of the two – this is a very basic example, as lenders will always have many more criteria for approval. But it shows why it’s important to be prepared and approach a suitable lender based on your circumstances.

The experienced mortgage advisers at Think Plutus will be able to match your criteria to the right lender. The goal is to tick every box in their assessment process so that your application proceeds successfully to the offer stage.

Call in the experts

If you are looking to secure a mortgage with a default, Think Plutus is here to help. It’s important to get your application right at the first attempt, as being declined could further decrease your chances of success and jeopardise any offers you have put forward for a property.

This is a specialist area, so you need specialist advice. A high street lender would be very likely to decline your application swiftly. Never try to be dishonest about your credit issues when speaking with an adviser, as lenders will quickly pick up any irregularities.

Mortgage with a satisfied default

Having satisfied a default will not necessarily make a huge difference to your attempts to secure a mortgage. It’s common for borrowers to assume that past debts must be satisfied to be approved, but this isn’t necessarily true. Satisfying a debt like a default will strengthen your credit file because it will demonstrate that you’ve regained some control over your finances. This may increase the number of lenders that would be willing to consider your application, but it isn’t absolutely necessary.

There are many lenders who will consider your application whether or not you have satisfied the default. This is good to know, particularly if you need to get a mortgage quickly and haven’t yet managed to satisfy the default. We speak to a lot of people who would have started the application process much sooner if they had known this.

There is some value to satisfying a default, but most lenders will primarily be interested in the date that default was registered. With the help of Think Plutus, you could find the right lender that is a good match for your circumstances. This will greatly increase your chances of success with your mortgage application.

How different types of default effect mortgages

The nature of your default will make a difference for your mortgage application. All defaults are not treated as equal, and some lenders will be a better fit for certain default types than others. For example, a default on a phone bill differs from a default on a secured loan in terms of its severity. Some lenders will observe this difference and carry out their assessment accordingly. There are, however, some lenders that will have a blanket refusal to lend for any kind of default.

We have even seen many lenders approve mortgages regardless of whether the default was a phone bill or a secured loan. The important thing is to approach the right lender. Quality mortgage advisers, like the team at Think Plutus, will know the right lenders to approach. Don’t leave anything to chance.

What about if you have a default with additional credit issues?

Having more issues on your credit file will make it exponentially more difficult to get a mortgage. If your credit issues are light, such as being in a debt management plan or having CCJs, in addition to defaults shouldn’t make it impossible to get a mortgage. That said, there is still a slim chance even with major issues like bankruptcy or repossession. You will probably see increased fees and rates, but there is a chance with the help of a good mortgage adviser.

How much can I borrow if I have defaults?

With a clean credit file and no defaults, borrowers can expect to be offered between 3x and 5x your income on average. Once defaults enter the equation, maximum borrowing becomes more of a challenge. Borrowers with defaults are viewed as higher risk in comparison to those whose credit file is clean.

If a lender approves a maximum mortgage amount, they will usually have tried to do so with the least possible amount of risk. One way to lower the risk is to increase the rates and fees. If your default happened a long time ago – think 4+ years – you will probably be able to get a maximum amount mortgage without those more expensive rates.

Lenders assess your borrowing capacity by looking at your income. Different lenders assess income in different ways; some will consider bonuses, for example, while others will not. For self-employed borrowers, one lender might only ask for 1 year of accounts, while another might insist on 3 years. Adding in the variable of a default, you can see why the help of a mortgage adviser can make a difference.

Lenders will assess more than just your income; they will also assess your outgoings and the financial commitments you have. There is no one-size-fits-all answer to how much you will be able to borrow – it all depends on your circumstances. For a more informed answer, please don’t hesitate to get in touch. Our expert advisers can give you a rough idea of the amounts you’re likely to be offered based on what you can tell them.

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