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Can I get a mortgage with a default?

We look at how defaults on your credit file can affect your mortgage applications and what you can do about it

A photo of Dom Limberg, the author

By Dom Limberg

Published on: 17 May 2022

8 min read

Can I get a mortgage with a default?

It is common for people to have credit history problems, and especially in the current economic climate. Defaults are one of the most common and one of the less severe types of bad credit that you can have. 

Mortgage lenders have their own individual lending criteria which can be more or less lenient towards people with defaults. 

In this section we look at how defaults on your credit file can affect your mortgage applications when buying a home and what you can do about it. 

What is a default? 

A default is where a credit provider has registered that they have not received payments on their credit agreement. Usually you would receive a default on your credit file if there were between 3 and 6 consecutive missed payments or if there was no response from the borrower over a period of time. 

Most common types of credit defaults are: 

  • Loans 
  • Credit cards 
  • Store cards 
  • Telecommunications contracts (e.g. mobile phones, broadband etc.) 
  • Utilities (e.g. gas, electricity, or water) 
  • Council Tax 

There are lots of reasons why people get to the point of defaults and some are also not exactly fair, but they are common. 

Can I get a mortgage with a default? 

The simple answer is yes, as long as there are no other more serious credit problems and you can afford the loan. 

There are many different elements and factors to getting a mortgage, including your credit history, which is one of the more important factors. If you have a default on your credit file, lenders will assess your suitability based on this and any other relevant points. 

It is also true to say that some lenders don’t accept mortgage applications with defaults, so you might need a specialist lender. 

You might not be able to get a mortgage through your own bank or building society if you’ve got missed payments and credit issues in your past. Don’t worry if you’ve been declined or refused a mortgage because of your credit history, there are generally more mortgage loan options. 

How do mortgage lenders work out if I am eligible? 

All mortgage lenders have a thing called their ‘lending criteria’ which is a scale or table that they use for assessing eligibility. Some lenders are simply better than others when it comes to lending to people with poor credit or low credit scores. 

Some of the key elements to mortgage eligibility with defaults: 

Date your defaults were registered 

The most important element to most adverse credit or poor credit mortgages is time. In this case, the longer it has been since your default was registered the better it is. 

Some of the key time periods here are: 

  • 6 months since registered will bring up more lenders to choose from 
  • 3 years since registration dates will often give you more high street lenders who are prepared to lend 
  • 6 years after registered means that the default will disappear from your credit file and therefore will not be considered 

You might want to consider looking at options where you taking out a mortgage at a higher rate in the short term and then better rates in the long term. These are often known as credit repair mortgages. 

Value of your default(s) 

Most lenders will want to know what the total value of your defaults were, and this will form part of the assessment. Some mortgage lenders won’t consider lending if the overall value of the defaults are over £500 or allow single defaults up to £250. 

Specialist lenders will offer more flexibility for larger sums where defaults have a greater value. 

Number of defaults 

If there are multiple defaults on your credit file then this can have an impact on your eligibility for a mortgage. 

Some mortgage lenders have limits on the amount of defaults recoded and registered within a period of time. This can be things like 2 in the last 12 months and none in the past 3 months. This will usually be higher through specialist lenders and more restrictive through high street lenders. 

Satisfied defaults (and when satisfied) 

If you’ve paid your defaults off then they will usually show on your credit file as an S for satisfied. If this is the case then some lenders will look more favourably on this and then your options can improve. 

Also, the date that you managed to satisfy the default can be important for some lenders. 

Type of credit that you defaulted on 

There are lots of different types of credit that you can default on, and some are considered more serious than others. Examples of this might be a mobile phone contract which is considered to be one of the least severe. This is because of the amount of problems that people have with mobile phone companies. 

How much will a default affect my mortgage? 

This is a difficult question to answer specifically, but there are some general rules that might apply here. 

When you apply for a mortgage in the UK, you’ll be asked about your credit history and a credit search will almost always take place. Any credit issues/missed payments will be applied to your application and can cause several potential outcomes. 

Here are some of the possible outcomes: 

Accepted with higher interest rate 

This is possibly the most common outcome that we see is where borrowers are accepted for a loan at a higher interest rate. These interest rates can be marginally higher than a standard high street mortgage rate, or several points higher for more severe credit problems. 

Accepted at lower loan to value (LTV) 

Some lenders might accept an application for a loan but then can restrict the amount that they are prepared to lend. This could mean that someone could borrow 5, 10 or 15% less than they would be able to with no credit problems. 

Accepted with affordability restrictions 

You might also be offered a mortgage from a lender with a lower income multiple than you would see normally. This can be to allow a bigger margin for any potential affordability issues in the future if there are more credit problems. 

Declined or refused loan 

Some lenders simply won’t accept default mortgage applications and this can be either down to the lender or the reason for the default. It’s less common to be refused a mortgage because of defaults but it can happen. 

Can I get a mortgage with a satisfied default? 

When you satisfy a default, the reality is that it will still show on your credit file and your score will remain lower. 

Satisfying a default won’t have a massive impact on your mortgage rate but it is still positive. You might find that there are a few more options when it is satisfied or that the terms offered are slightly better. 

Most default mortgage deals will be similar, regardless of whether you have satisfied a default or not. 

Which mortgage lenders accept defaults? 

The good news is that most mortgage lenders will consider offering loans to people with defaults, especially if satisfied. Some of the top mortgage high street lenders in this situation include Nationwide, NatWest or TSB. The deals on offer from these lenders will depend on the amounts due on the default and the number of defaults. 

You might also have a slightly more complicated situation with more specialist requirements which may be more suited to specialist lenders. If your situation is more difficult then there are a number of mortgage lenders that might be better suited to you, such as Accord, Bluestone, Vida Homeloans or Together Mortgages. 

The lenders that will be available to you will depend on: 

  • Date default was registered 
  • Value of default 
  • Satisfied or unsatisfied 
  • Date satisfied (if applicable) 
  • Background information 

Lenders will review each application on individual merits and therefore will make a decision based on the information provided. 

Certain lenders will be better than others for approving mortgages for people with defaults, as well as other credit issues including:

How much can I borrow with defaults? 

There are some potential restrictions to home loans for people with debts and credit issues, depending on your situation. It is important to understand what you can get before you apply for a mortgage so you don’t waste your time and unnecessary credit searches. 

If you’ve had or still have defaults on your credit file, this can cause a few things to happen. These can include: 

  • Affordability restrictions: some lenders might offer mortgages with lower income multiples than you might get on a standard loan. Normal income multiples are around 5 times so your offers could be lower than this. 
  • Loan to Value (LTV) restrictions: other lenders can limit the amount that they would be prepared to offer you against the value of your property. Standard LTV loans would offer up 90% of the value of your home, so your limit might be 85% or even 80%. 

These restrictions will vary depending on your circumstances and the background of your default. If your situation is positive and not serious, then you might find that there are minor or even no restrictions. 

Note: each lender has its own criteria so you might be able to get better terms by speaking to a qualified mortgage expert and getting specialist advice. There might be certain circumstances where your situation can be improved over a short period of time (e.g. if your default was just under 6 years ago). 

Best mortgages with defaults 

The key factor here is time and timing because that alone can have a significant difference to how good your mortgage offer will be. 

Some of the main points to get the best mortgages are: 

  • New defaults (unsatisfied) is considered to be more severe by most lenders 
  • New defaults (satisfied) can be slightly better for some lenders, but you’ll still have similar issues with a new default 
  • Defaults under 6 years (unsatisfied or satisfied) is better for some borrowers as it shows some repayment history and a period of settlement 
  • Defaults over 6 years will no longer show on your credit report but there may still be an issue with lower credit scores 
  • Defaults over 6 years and improved credit scores will enable you to be able to access normal mortgage deals and rates 

How to get a mortgage with defaults 

There are a number of options that are available for people that are looking for mortgages with defaults. One of the best options is to speak to a qualified mortgage specialist that has access to a strong panel of lenders. 

You can also speak to your bank or building society if your situation fits with their lending criteria, but this is less likely to be a good option. You might also be able to get a mortgage deal online if you know what you’re doing and you know your credit history details. 


StepChange – Default notices, missed payments and your credit file – Options for paying off your debts

Citizen’s Advice – Debt and money

Citizen’s Advice – How lenders decide whether to give you credit

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