Old Defaults Mortgage Rates: How Long Do They Affect Your Options?
If you have defaults on your credit file, one of the biggest concerns is whether they will impact the mortgage rate you can secure — and for how long. Defaults remain visible for six years, but their impact reduces over time, and many lenders treat older defaults differently from recent ones. This guide explains how old defaults mortgage rates are assessed, what lenders consider, and how aging defaults can influence your mortgage options today.
This article provides general information only and does not offer regulated mortgage advice.
Do Old Defaults Affect the Mortgage Rates You’re Offered?
Yes — but the impact depends on how old the defaults are, whether they’re settled, and your overall financial profile.
Most lenders view defaults in age brackets:
- 0–12 months old: Strong impact
- 1–3 years old: Moderate impact
- 3–6 years old: Impact reducing
- 6+ years old: No longer appear on credit files
The older the default, the more likely lenders will offer competitive rates.
How Long Do Defaults Stay on Your Credit File?
Defaults stay on your credit file for six years from the date of default, regardless of when you settle the debt.
During this period, lenders can:
- View the default entry
- Assess how serious it was
- Analyse whether it was settled
- Consider its age in affordability and risk decisions
After six years, the default disappears entirely and typically no longer affects mortgage options.
How Default Age Affects Mortgage Rate Options
Defaults Under 12 Months Old (Significant Impact)
Recent defaults signal high risk.
Lender outcomes may include:
- Higher mortgage rates
- Lower maximum borrowing
- Specialist lender options only
- Larger deposit requirements
Even one recent default can limit high street lender availability.
Defaults 1–3 Years Old (Moderate Impact)
Lenders differentiate between newer and older defaults.
You may still face:
- Limited high street rates
- Requirements for larger deposits
- Manual underwriting checks
However, more lenders begin to consider applications in this bracket.
Defaults 3–6 Years Old (Lower Impact)
Many mainstream lenders may consider lending if:
- Defaults are settled
- No repeated issues appear
- Bank statements show stable recent conduct
Rates are often closer to standard market rates.
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Defaults Older than 6 Years (No Impact)
Once defaults drop off your credit file:
- Most lenders will not see them
- They do not influence mortgage rates
- Underwriting is based on current financial behaviour
Only historic adverse still visible on your file (e.g., CCJs) will matter.
Settled vs Unsettled Defaults: Does It Affect Rates?
Yes — settlement status can influence the mortgage rate you receive.
Settled Defaults
Seen as responsible financial behaviour.
Lenders may offer:
- Wider choice of products
- Better rates
- Increased confidence in affordability
Unsettled Defaults
Viewed as ongoing risk.
This may lead to:
- Limited lender choice
- Higher rates
- Specialist lenders only
Even older defaults may affect rates if they remain unsettled.
Does Default Value Affect Mortgage Rates?
Yes — lenders assess the size of the default.
Small Defaults (£100–£500)
Often treated with more leniency, especially when old.
Medium Defaults (£500–£2,000)
Moderate impact depending on recency.
Large Defaults (£2,000+)
More significant impact, especially if multiple or recent.
Large defaults within three years may restrict access to high street rates.
Multiple Defaults vs Single Default
Lenders also assess quantity:
- Single old default: Often acceptable with competitive rates.
- Multiple old defaults: Still possible, but lender choice may shrink.
- Multiple recent defaults: Likely to require specialist lenders with higher rates.
Patterns matter more than the number alone.
How Lenders Assess Defaults Beyond the Credit File
Even if a default is old, lenders will still examine:
1. Bank Statements
Looking for:
- Overdraft reliance
- Irregular spending
- Returned payments
- High BNPL usage
Strong recent behaviour helps reduce risk perception.
2. Affordability Calculations
Defaults may not directly affect affordability, but lenders still ensure:
- Income covers mortgage payments
- Outgoings are manageable
- No sign of financial strain
If affordability is strong, lenders may overlook older defaults.
3. Employment Stability
Long-term employment or consistent income can offset the risk associated with old defaults.
4. Deposit Size
Larger deposits improve access to better rates.
Typical impact:
- 5% deposit: Limited flexibility
- 10% deposit: Wider high street choice
- 15–25% deposit: Many lenders accept older settled defaults
- 25%+ deposit: Strong access to competitive rates
Lenders feel more secure with lower loan-to-value (LTV) ratios.
Can You Get High Street Rates With Old Defaults?
Often yes — especially when:
- Defaults are 3+ years old
- There are no recent issues
- Defaults are settled
- Spending patterns on bank statements are stable
- Affordability is strong
Some high street lenders may decline if defaults are within three years, but others take a more flexible approach depending on circumstances.
When You May Need a Specialist Lender
A specialist lender may be required if:
- Defaults are recent (0–24 months)
- Defaults are large or multiple
- Defaults remain unsettled
- Credit history is unstable
- External debt levels are high
Specialist lenders often accept more complex cases but may offer higher rates.
How Long Until Defaults Stop Affecting Your Ability to Get a Good Rate?
After 3 years:
Many lenders reduce how heavily they factor defaults into pricing.
After 6 years:
Defaults disappear from your file entirely — no direct impact on rates.
Sooner if settled:
Settling defaults can improve access to competitive rates faster.
What You Can Do Before Applying (General Information Only)
While this isn’t advice, many applicants choose to:
1. Review all three credit reports
Ensures defaults show correct dates and settlement status.
2. Settle outstanding defaults
Shows responsible financial behaviour.
3. Build a larger deposit
Widens lender options and improves rate choices.
4. Maintain clean bank statement conduct
The last 3–6 months matter most.
5. Avoid new credit applications
Keeps your profile stable.
Common Scenarios
Scenario 1: One settled default from five years ago
Most lenders may offer standard rates.
Scenario 2: Two defaults three years ago, both settled
Possible high street options but with closer underwriting checks.
Scenario 3: Recent default within 12 months
Specialist lender likely needed, often with higher rates.
Scenario 4: Large unsettled default from two years ago
Specialist options more likely.
Summary
The impact of old defaults mortgage rates depends heavily on:
- How old the default is
- Whether it’s settled
- The size and number of defaults
- Your recent financial behaviour
- Deposit size and affordability
Older defaults, especially those settled and over three years old, often have significantly reduced impact. After six years, they no longer appear on your credit file and do not affect rates at all.
This article provides general information only. Personalised guidance would require regulated mortgage advice.
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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.