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Mortgage with a Default

Is it possible to get a mortgage with a default?

Yes, it may still be possible to get a mortgage with a default, and New Start Financial Services can help.

Defaults are registered by lenders when an account falls into arrears, usually by 6 months though some are registered earlier. It is possible to not be aware that you have a default and possible to only find out when a mortgage application fails. Unpaid credit usually means getting a default but often these do not become county court judgement so for many people defaults are the major obstacle to getting a mortgage. High street lenders have no real appetite to lend to problem credit profiles and want clean profiles. Fortunately, there are now several specialists that sit just off the High Street and depending on your overall profile, want those cases that have been declined on the High Street.

The adverse market was estimated to be worth £25bn back in 2006, but as lenders retreated following the credit crunch, the options for individuals with bad credit scores drastically diminished. Today things are starting to improve slowly and a number of lenders who specialise in adverse mortgages have returned to the market. When it comes to getting a mortgage, the options open to you will depend on how serious your problems have been (e.g. bankruptcy, missed payments, default), what amount of deposit you have available or equity if you are re-mortgaging and how long ago the problems took place. To make things trickier, every lender differs and there is no ‘one size fits all’ criteria. Most lenders cater for customers with clear credit profiles, whereas some specialise in adverse credit Lending. A specialist broker will be able to suggest the most appropriate solution in your individual case.

Will having my default ‘satisfied’ will improve my credit ranking?
You’ll probably find that if you settled your default, it may be a bit easier to obtain a mortgage though generally the lenders that accept defaults are only concerned with when they were registered, not the dates of settlement. In most cases, mortgages with unsatisfied defaults are just as easy to be approved depending more on when they were registered.

Does the type of the default make difference?
Yes. Many lenders will consider default as ‘less severe’ if it’s a mobile phone default. The most sever defaults would be a mortgage and secured loan defaults.

How much can I borrow if I have defaults?
Lenders use a complex calculation taking into account your credit history, your age, income and other commitments. Different lenders use though different models. Your broker will though be able to match you to the most appropriate lender.

Who shall I approach for a mortgage with a default?

Different lenders have different criteria and some may or may not be right for you. You do not want to have declines on your credit profile as this again will have a negative effect.

To maximise your chances of getting a mortgage a specialist broker will help identify the right solution for you and then help secure the solution for you.

Why use a specialised broker?

Sub-prime mortgages are mortgages for borrowers that don’t fit standard criteria and need a little more help in finding the right solution. Prior to 2008 ‘bad credit mortgages’ were supplied by specialist lenders and less severe problems were very often catered for by High Street Lenders. Following the credit crunch specialist lenders almost disappeared from the market and High Street Lenders appetite for risk disappeared, so for a number of years applicants with special needs really had no options.

Now though whilst the High Street stays firmly in the camp of credit score lending there are a number of specialist or niche lenders who actively want to lend from clients with failed credit score borrowers with minor problem or ‘near prime’ all the way up to more severe problems such as having defaults, CCJ’s, pay day loans, missed payments, debt management schemes and bankruptcies.

A good specialist brokers can help you find the right, most suitable solution, for you based on your circumstances – if your credit score is damaged they can help find you a lender who is right for you even though you have probably been declined by a high street lender. A good broker will have an in-depth knowledge of the market and they will be able to recommend the most suitable mortgage for you minimising the risk of your application getting rejected.

Stuart Dibley Specialist
Mortgage Adviser

To find out exactly what you're eligible for and at what rates please give me a call on 03456 123835 or fill out a quick enquiry form here.