Getting a mortgage with a default may still be possible. A default can reduce the number of lenders willing to consider an application, but it does not automatically mean that your application will be declined.
Lenders normally consider when the default was registered, the amount involved, the type of credit account, whether the debt has been settled and how you have managed your finances since.
Mortgage Bridge provides general information to help you understand how defaults may affect a mortgage application. Where appropriate, we can introduce you to an FCA-regulated mortgage adviser who can review your circumstances and provide regulated advice.
What is a default?
A default may be recorded on your credit file when a lender considers that the agreement between you has broken down, usually following a series of missed or insufficient payments.
Defaults can relate to various types of borrowing and household accounts, including:
- Credit cards
- Personal loans
- Overdrafts
- Mobile phone contracts
- Utility accounts
- Mail-order or catalogue accounts
- Vehicle finance
- Previous mortgage or secured-loan payments
A default will generally remain on your credit file for six years from the date it was registered, whether it is subsequently settled or remains outstanding.
Can you get a mortgage with a default?
Yes, it may be possible to get a mortgage with a default. The available options will depend on the lender’s criteria and the overall strength of your application.
Some lenders may accept applicants with historic or relatively minor defaults. More recent, substantial or repeated defaults may result in fewer options and could require more detailed assessment.
Lenders will also consider your income, affordability, deposit, current commitments and recent financial conduct. A default is therefore normally assessed as part of your wider financial position rather than in isolation.
How lenders may assess defaults
Every lender applies its own criteria, but the following factors commonly influence how a default is assessed.
How recent the default is
Recent defaults may have a greater effect on an application than older defaults. A lender may want to see that the circumstances leading to the default have been resolved and that your subsequent payment history has been more stable.
Defaults that are several years old may carry less weight, particularly where there have been no further credit problems.
The amount involved
The value of the default may affect a lender’s decision. A small default on a communications or utility account may be assessed differently from a substantial default on a loan, credit card or secured borrowing.
There is no universal amount that every lender will accept, so the default must be considered alongside the rest of the application.
The type of account
Lenders may distinguish between different types of default. Defaults involving mortgage payments, secured borrowing or significant financial commitments may be treated more seriously than certain smaller consumer or household accounts.
The circumstances surrounding the default may also be relevant. For example, an isolated administrative dispute could be considered differently from persistent difficulty meeting repayments.
Whether the default has been settled
A settled default shows that the outstanding balance has been repaid. Some lenders may view this more favourably, although settling a default does not remove it from your credit file immediately.
An unsettled default does not necessarily prevent a mortgage application, but it may reduce the number of lenders available. A lender or mortgage adviser may also want to understand why the balance remains outstanding.
The number of defaults
One historic default may be treated differently from several defaults across multiple accounts. Multiple defaults can suggest a wider period of financial difficulty, particularly where they occurred at different times or remain unresolved.
Lenders will normally look for evidence that your circumstances have since improved.
Your recent financial conduct
Your more recent payment history can be particularly important. Lenders may review your credit report and bank statements to understand whether you are currently managing your commitments consistently.
Recent missed payments, persistent overdraft use, returned payments or further borrowing could affect the assessment, even where the original default is several years old.
Can you get a mortgage with a recent default?
A recent default may make obtaining a mortgage more difficult, but it does not necessarily rule out every option. The outcome will depend on the cause of the default, the amount involved and the strength of the rest of the application.
A lender may pay particular attention to whether the default resulted from a temporary event or forms part of continuing financial difficulty. Stable income, improved account conduct and an affordable application may help provide context, but approval cannot be guaranteed.
Settled and unsettled defaults
Both settled and unsettled defaults may be considered by some lenders, although their criteria will vary.
Settled defaults
Settling a default can demonstrate that the outstanding debt has been addressed. However, the default will usually remain visible on your credit file for six years from its original registration date.
Unsettled defaults
An unsettled default may require additional explanation. Before repaying or negotiating an old debt solely for the purpose of a mortgage application, it may be sensible to obtain appropriate advice about your circumstances.
Defaults alongside other credit issues
A default may appear alongside other credit issues, such as missed payments, County Court Judgments, arrears or arrangements to repay debt.
Having more than one type of credit issue does not automatically prevent you from getting a mortgage. However, lenders will normally assess the combined pattern, including when each issue occurred and whether your current position appears sustainable.
Deposit and affordability
The deposit required will depend on the lender, the property, the nature of the default and the rest of your application. Some applicants with adverse credit may have access to fewer high loan-to-value products, meaning a larger deposit could be needed.
A larger deposit does not guarantee acceptance. The lender must still be satisfied that the mortgage is affordable and appropriate under its lending criteria.
Affordability assessments may include:
- Your income and employment circumstances
- Existing loans, credit cards and other commitments
- Household and essential expenditure
- Dependants and maintenance commitments
- Your credit history and recent financial conduct
- The proposed mortgage term and monthly payments
Practical steps before applying
If you have a default, the following steps may help you understand your position before submitting an application:
- Obtain and review your credit reports from the main credit-reference agencies
- Check that the default date, balance and settlement status are recorded correctly
- Raise a dispute with the relevant provider if any information is inaccurate
- Make all current payments on time
- Avoid unnecessary applications for further credit
- Keep your bank-account conduct stable
- Prepare an explanation of the circumstances that led to the default
- Collect evidence showing that your financial position has improved
- Review your income, expenditure and existing commitments realistically
Avoid making repeated mortgage applications without first understanding the likely criteria. Multiple unsuccessful applications and additional credit searches could make the situation more complicated.
How Mortgage Bridge supports you
Mortgage Bridge provides general information to help you understand the factors that may affect a mortgage application involving defaults. We do not provide mortgage advice, recommend lenders or make lending decisions.
Where appropriate, we can introduce you to an FCA-regulated mortgage adviser. The adviser can review your credit history, affordability, deposit and wider circumstances before providing regulated advice.
When it may help to speak to a mortgage adviser
It may be useful to speak to a regulated mortgage adviser if:
- Your default was registered recently
- The default remains unsettled
- You have more than one default
- You also have CCJs, arrears or missed payments
- Your income is variable or comes from several sources
- You are self-employed
- You have previously had a mortgage application declined
- You are unsure how much deposit you may need
Common questions about defaults and mortgages
Does a default automatically prevent me from getting a mortgage?
No. A default can limit your options, but it does not automatically prevent a mortgage application from being accepted.
Will paying a default remove it from my credit report?
No. Once settled, the entry should normally be updated to show that it has been satisfied, but it will generally remain on your credit file for six years from the default date.
Is an older default easier for lenders to accept?
It may be. Some lenders place less weight on older defaults, particularly where your subsequent payment history has been stable. The treatment will depend on the lender’s individual criteria.
Can I apply if the default is still outstanding?
Possibly. Some lenders may consider an outstanding default, depending on its age, amount, type and the wider circumstances. Options may be more limited than they would be with a settled default.
Will I need a larger deposit?
You may need a larger deposit if the default limits the number of products available. The amount required cannot be determined from the default alone and will depend on the complete application.
Can I get a mortgage with several defaults?
It may still be possible, although multiple defaults can result in a more detailed assessment and fewer available lenders. Their dates, amounts, status and causes will all be relevant.
Next steps
If you have a default and want to understand how it may affect a mortgage application, Mortgage Bridge can provide general information and, where appropriate, introduce you to an FCA-regulated mortgage adviser.
The adviser can assess your full circumstances and explain the mortgage options that may be available under current lender criteria.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments.
Related Guides
Explore more advice that may help your situation.
Low Credit Score Guides
See how improving your score affects the lenders available to you.
Debt Solution Guides
Helpful if you have, or recently finished, an IVA, DMP or other arrangement.
No Deposit & Bad Credit
Look at deposit options once your credit position has started to improve.
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.