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Can you get a mortgage with a default?

Did you know that one of the most common reasons stated for mortgage rejections are defaults on the credit file? Sadly, past mistakes can cost us dearly when it comes to mortgage applications. While there are ways of improving your credit score, these take time. 

The good news is that while they may be a common cause of mortgage rejections, having a default on your file doesn’t mean a mortgage is impossible.

What is a default on your credit file?

Defaults refer to a report of missed payments, usually spanning three to six months. A default can be set against you for missed payments to your utility or mobile phone provider, for example. 

The bad news is that defaults are recorded on your credit file, directly impacting your credit score, which is seen and used by mortgage lenders when analysing eligibility. 

Defaults will remain on your credit file for six years, even if you have paid your debt in full. You can, and should, continue with your repayments even if a default has been registered. Continuing to miss payments can result in a CCJ being registered against you; which will have a further detrimental impact on your mortgage prospects.

Can you have a good credit score with a default?

It is possible to have a good credit score with a default. How much of an impact a default has on your credit score will depend on the amount of money owed and any further actions stemming from this default, such as a CCJ.

You may see a marked improvement in your credit score once a default has been removed. There are ways to improve your credit score, even with a default. These include settling your outstanding debt, staying on top of current repayments and applying for a credit-building card.

Can you get a default removed from your credit file?

The good news is that defaults do not stay on your file forever, and the company that reported the default is not able to do so again for the same missed payments. 

If you believe a default on your credit file is inaccurate, you can submit a request to either remove or update the information.

Unfortunately, other than requesting an update or a correction, you cannot remove a default from your record. You must wait for the six years to run its course. The good news is that once you have repaid your debt, this will be reflected in your report, which is reassuring to lenders; particularly if the default was recorded years ago and your record has been clean since.

Can you get a mortgage with a default?

Many believe that mortgage providers operate on a one-size-fits-all basis, but that can not be further from the truth. Mortgage lenders work with differing criteria, which is why it is essential to shop around before you apply. 

Some of the specialisms mortgage providers operate within include:

  • Self-employed or contractor mortgages
  • Shared ownership mortgages
  • Bad credit mortgages

And more. 
Therefore, while having a default on your credit report can make it difficult, your mortgage application can still be approved.

How long after a default can I get a mortgage?

There is no set time-frame, however, the older a default, the more likely you are to be approved for a mortgage. Some lenders are willing to take a risk on applicants with defaults, so it is worth shopping around or requesting assistance from a mortgage broker.

AMS Mortgages are specialists at helping clients with defaults find a mortgage. Get in touch for advice.

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