Mortgage with defaults
Getting a mortgage with defaults, does mean that you will probably need to talk to a more specialist mortgage advisor to get you the mortgage deal you want. Getting good mortgage advice from someone who understands about lenders that will accept defaults is paramount.
Lenders will issue a mortgage where the applicants have previous defaults, obviously different lenders have different criteria for how many defaults and when the defaults were issued all affect the amount of mortgage and the mortgage rate that would be available.
How Lenders look at lending for a mortgage with defaults
Typically most lenders don’t want to see any defaults in the last 12 months, the reason for this is they want you to have established an ability to meet and repay any debts or credit that you take out, and not having any defaults in the last 12 months is one indicator of that.
Typical criteria from a mortgage lender, when assessing a mortgage with defaults would be;
- Maximum of 3 defaults to a max of £2,500 , max of 3 in last 36 months , 0 in 12 months
- No defaults in last 24 months, defaults over 24+ months ignored
- No defaults in last 36 months, refer to lender for any in past 60 months
As you can see in just the 3 examples above, Lenders have very different criteria, and some will judge defaults in very different ways. The last example above is your typical high street clean credit lender, and although they seem to infer they will look at bad credit and defaults for a mortgage after 36 months, most still run a credit score anyway. But other mortgage lenders will look at defaults, depending upon their amount and also how recent they were.
Mortgage advice with defaults
a lot of people have some form of belimsh on their credit reports, from a late or missed payment to defaults. Getting a mortgage with a defaults shouldnt stop you, it does of course depend on the amount of default and how recent the default was, but there are many UK ortgage lenders that will accept levels of defaults.
Get a mortgage with defaults ?
We help a lot of people with defaults on their credit file get a suitable mortgage, lending might be restricted and you need to start to be thinking about having at least 20% deposit if you have recent defaults , through to a lower deposit if your defaults are over 3 years old and were minor anyway.
What is a Default ?
A default notice is a formal letter which is usually sent after three to six missed payments. They can only be issued for debts that are regulated by the Consumer Credit Act.
There are several things that it should include:
- The type of agreement
- The agreement terms that have been broken
- What you should do to put the account in order (how much you need to pay and by when)
- What the creditor will do if you don’t comply with the request
- How long you have to respond (this should be a minimum of 14 days)
It should also include an information sheet from the Financial Conduct Authority with guidance on what to do and how to get free debt advice. We’re listed on there.
They usually ask for a lot of money within a short period of time, something that’s impractical for most people to afford.
Can I still get a mortgage with defaults?
YES in most cases you can, the loan to value might be a bit lower, ie you might need 10 – 20% deposit , but having one defaults or even a few defaults wont stop you obtaining a mortgage. You just need to know which lenders to approach. The best thing to do is obtaina copy of your credit report and correct any errors on it. Then make sure you talk to a qualified mortgage advisor and send thema copy of your credit report