Mortgage With a Default: Can You Still Get Approved & What Lenders Look For

Mortgage With a Default: Can You Still Get Approved & What Lenders Look For

Finding a default on your credit file can be worrying, especially if you’re thinking about applying for a mortgage. Many borrowers assume a default means automatic rejection — but that isn’t the case. Lenders see defaults for a variety of reasons and will assess the age, value and context before making a decision.

This guide explains your options for getting a mortgage with a default, what lenders care about most, and practical steps to help strengthen your application. This article provides general information only and does not offer regulated mortgage advice.

Can You Get a Mortgage With a Default?

Yes — many people secure mortgages with one or more defaults.
Your chances depend on:

  • How old the default is
  • Whether it has been settled
  • The amount owed
  • Whether there are multiple defaults
  • Your income and affordability
  • Recent bank statement conduct
  • Deposit size

Some high-street lenders accept older settled defaults, while specialist lenders consider more recent or unsettled defaults.

Understanding Defaults and How They Affect Mortgages

A default is recorded when a credit account has been unpaid for a significant period, typically 3–6 months. It shows lenders that a debt fell into serious arrears.

Key factors lenders analyse:

  1. Age of the default – older is far less severe
  2. Settlement status – settled defaults show responsibility
  3. Default amount – small telecommunications defaults are often treated more leniently
  4. Number of defaults – more defaults increase risk
  5. Reason for the default – lenders often request explanations

A default stays on your credit file for six years, even if settled.

How the Age of the Default Impacts Approval

The older the default, the more flexible lenders generally are.

Default under 12 months old

Most restrictive.
Likely to require specialist lenders and lower LTVs.

1–2 years old

Some specialist lenders available depending on clean recent conduct.

2–4 years old

Much more manageable; many lenders may consider at moderate LTVs.

4–6 years old

Often accepted by mainstream lenders, especially if settled and low value.

Settled vs Unsettled Defaults

You do not always need to settle a default to get a mortgage, but settlement can significantly improve acceptance.

Settled default advantages:

  • Shows the issue has been resolved
  • Opens more lender options
  • Reduces required deposit in many cases

Unsettled default outcomes:

  • Many high-street lenders decline
  • Specialist lenders may still accept
  • Higher deposit or lower LTV may be required

If you settle the default before applying, lenders will see a more stable financial pattern.

How Much Deposit Do You Need With a Default?

Deposit requirements vary based on the profile of the default.

Typical Loan-to-Value (LTV) expectations:

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  • 95% LTV – rare but possible with older minor defaults
  • 90% LTV – possible with settled defaults over 3–4 years old
  • 85% LTV – common for defaults over 2 years old
  • 75–80% LTV – typical for recent or multiple defaults through specialist lenders

A larger deposit reduces lender risk and increases your options.

What Types of Defaults Matter Most?

Lenders distinguish between types of defaults:

Telecommunications Defaults

(Phone, broadband, utilities)
Often treated more leniently, especially if low value.

Credit Card or Loan Defaults

Considered more serious because they involve regulated credit.

Multiple Defaults

Lenders will review total value, timing and recurrence patterns.

High-Value Defaults

Defaults over several thousand pounds may require specialist lending and higher deposits.

What Lenders Check Besides the Default

A default is just one part of the overall assessment. Lenders also examine:

1. Your Recent Payment History

The most important part.
If the default is old but recent conduct is clean, approval likelihood increases.

2. Your Bank Statements (3–6 months)

Lenders look for:

  • No unarranged overdrafts
  • No returned payments
  • Predictable spending
  • Steady income
  • No signs of financial strain

Recent behaviour can outweigh older issues.

3. Affordability and Debt Levels

Even with defaults, if affordability is strong and debts are under control, approval is more likely.

4. Stability of Employment and Income

Stable income helps offset credit concerns.

5. Your Explanation for the Default

Lenders often ask for context, such as:

  • Moving address
  • Administrative errors
  • Relationship breakdown
  • Redundancy or illness

Clear, factual explanations support manual underwriting.

High-Street vs Specialist Lender Flexibility

High-Street Lenders

May accept:

  • Old defaults (usually over 3–4 years)
  • Low-value settled defaults
  • Single isolated defaults

Will likely decline:

  • Recent defaults
  • Multiple unresolved defaults

Specialist Lenders

More flexible with:

  • Recent defaults
  • Multiple defaults
  • Higher amounts
  • Unsettled defaults

They use manual underwriting to assess the full picture.

Common Default Scenarios and Likely Outcomes

Scenario 1: One small phone default from 5 years ago, settled

Often acceptable on high-street terms.

Scenario 2: Two small defaults from 3 years ago, both settled

Possible with a range of lenders at 85–90% LTV.

Scenario 3: One default from 18 months ago, settled

Typically requires specialist lenders; 75–85% LTV likely.

Scenario 4: Multiple recent defaults

Specialist lenders required; higher deposit expected.

Scenario 5: Unsettled default from 4 years ago

Some lenders may still consider at moderate LTV.

How to Improve Your Chances of Getting a Mortgage With a Default

(General Information Only)

1. Settle the default if possible

Opens more lender options and improves scoring.

2. Keep all future payments on time

Lenders value recent behaviour far more than old issues.

3. Reduce credit card utilisation

Lower balances improve affordability and credit scoring.

4. Avoid new credit applications

Multiple recent searches may reduce your chances.

5. Build a larger deposit

Every extra 5% deposit increases lender choice.

6. Prepare to explain the default

A clear, factual explanation helps manual underwriters understand context.

7. Check all your credit files

Experian, Equifax and TransUnion may show different information.
Correcting errors can lift your profile quickly.

Summary

Getting a mortgage with a default is possible, and many lenders take a flexible approach depending on:

  • Age and value of the default
  • Settlement status
  • Your recent financial behaviour
  • Income stability
  • Affordability
  • Deposit size

Older and settled defaults are the easiest to approve, but even recent defaults can be considered by specialist lenders. With strong preparation and clean recent conduct, many applicants successfully secure mortgages despite past credit issues.

This article provides general information only. For individual guidance, regulated mortgage advice is required.

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Important information: Mortgage Bridge provides information only and acts as a mortgage introducer. We do not provide mortgage advice or make lender recommendations. We can introduce you to an FCA-regulated mortgage adviser who can provide personalised mortgage advice.