Most people I speak to think that because they have defaulted on a credit card or missed a payment on a loan that they will struggle to get a mortgage, but actually there are plenty of
lenders out there that will consider lending to individuals with ‘blips’ in their credit file or even more serious credit issues such as CCJ’s or Debt Management Plans (DMP).
I am going to focus on the little ‘blips’ in someone’s credit file today, you can read more on how to get a mortgage with a CCJ - HERE or how to get a mortgage with bad credit – HERE
Can I get a Mortgage with a Default(s)
In short the answer is yes (subject to certain criteria). Mortgage lenders in today’s age understand the financial pressures and have relaxed their criteria in some form.
More recently there has been a shift in the market, what I mean by this is that, I have recently had a main high street lender who will now accept individuals with a CCJ less than £500 and defaults under £2,000 as long as they were both satisfied. This huge, I know this lender would not have even sniffed at this 12 months ago.
The best of advice would be not to worry, speak to a mortgage broker who specialises in bad credit and I am confident a deal could be sought for you.
Check your credit file
Knowing your credit file is very important, particularly when applying for a mortgage with a default. This is particularly important to find out the exact date of the default,
the default balance and when you satisfied the default (if applicable) your mortgage adviser will then help you get the right deal based on your default history.
Websites such as Noodle allow you to check your credit report for free
Are some defaults more severe than others?
A default can happen with any creditor, this could be a mobile phone default, utility bill default or even mortgage default.
The severity of the default could determine the type of lender that a broker will chose, for example a mortgage default in the last 6 months would cause serious concerns for a mortgage lender, however, a utility bill default for a small amount could be ignored completely.
How long do I need to wait to get a mortgage with a default?
Each default will stay on your credit file for 6 years but this doesn’t mean you need to wait 6 years to get a mortgage.
The longer the default has been on your credit report the less impact it is likely to have on obtaining a mortgage offer with a low interest rate, however, regardless on when the default was a specialist mortgage brokers can source the market to help find the right bad credit mortgage with a default for you!
Affordability with a default
You may think that because you missed a few payments and you were issued with a default that the mortgage lender will assess your affordability and decline an application based
on you being unable to manage your finances. This is partially un-true, particularly if you have satisfied (paid off) your default.
Your assessment of affordability will be the same as someone with a clean credit file, the lender will look at all your income and outgoing and make a judgment based on your ability to repay your mortgage. The risk will be greater to the lender if you have a history of defaults but this will be reflected in the mortgage rate.
Mortgage Lenders that accept defaults
Many mortgage lenders now consider some defaults, including various amount of high street lenders. The right mortgage lender and mortgage rate depends on your situation, so if you have a default your best bet is to speak to a mortgage adviser who specialises in mortgages with defaults.
Bristol and Bath Financial Services will work tirelessly with specialist mortgage lenders to get the right mortgage rate for you. So, if you have had a default and would like some mortgage advice then why not get in touch. Contact us now through social media or email me here