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Mortgage with defaults & missed payments

The traditional mortgage lenders such as the banks found on our high streets are seeking 'perfect customers' to give mortgages to, people who have vast deposits, no missed payments or defaults and exemplary credit scores. Missed payments or a default on your credit report will set alarm bells ringing and will often be all that is needed for your application to be shunned. It's a relatively common occurrence when people apply for a mortgage either as a first time buyer or as a second or third stepper, to be informed by the lender they are unable to proceed with their application because a default has shown up on their credit report. 

We can help you get a mortgage even if you have defaults

All is not lost as some specialist lenders are more accommodating towards those with previous financial blunders. Assuming you pass the affordability checks and there is nothing too sinister in your most recent credit history, a specialist lender may be able to assist. Most of the lenders who offer mortgages for people with a default or missed payments have no branches and only issue mortgages through professional mortgage brokers, so it make sense to seek no obligation advice.

As a specialist bad credit mortgage broker, we have access to lenders who are more likely to accept people who have defaults listed on their credit file. Over the years we've helped hundreds of people with defaults get a mortgage. Simply request a free, no obligation mortgage quote from us and we'll let you know whether we think we'll be able to help you. We have access to some specialist lenders who ignore defaults below a certain value or over a certain age. 

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How long will a default impact on my chances of getting a mortgage?

Missed payments and defaults will be listed on your credit report for a period of at least six years from the date of the default. So if you had a credit card default in 2016 it will only disappear from your credit report at some point in 2022. Lenders are most concerned about your recent credit history, but a 4 or 5 year old default is still going to be a nuisance when it comes to getting a mortgage. That said, there are lenders who consider applicants with defaults, providing they have not been issued in the past 6 months, so even a relatively new 1 year or 2 year old default may not prove to be a major obstacle when it comes to getting a mortgage, assuming your recent credit history is in good order and you have a deposit of at least 10% at your disposal. 

Lenders search your credit file which is produced by Credit Reference Agencies such as Experian, Equifax and Call Credit. Most lenders are looking for indications you are a reliable borrower, they want confidence you will repay what you borrow and a history of missed payments or defaults is like to scupper your chances with a mainstream provider but a specialist lender may be able to step in.

Lenders who will lend to people with defaults

Some specialist lenders recognise it's all too easy to miss the odd payment and their systems are designed with these people in mind. It's all too easy for mobile phone companies to slap on a default for a missed payment on a mobile phone contract,  relatively modest amount and specialist look beyond this They usually have several tiers of products covering customers who have simply got a low credit score or missed the odd credit card payment right through to those with more significant issues and people with recent credit issues.

A default on unsecured debt such as a credit card or mobile phone contract is seen as less serious with some lenders, while a default on mortgage or secured loan has more .

How you get defaults

Defaults are issued when the you fail to pay bills such a repayments on a personal loan, credit card, hire purchase, car finance or mobile phone contract. Disputes, oversights, redundancy, illness, unexpected bills and failing to advise the company of a new home address after moving home are often attributed as the causes of missed or late payments.

A single missed mobile phone payment could be enough to trigger a rejection by a lender. Many people do not identify mobile phone contracts as a type of borrowing, underestimating the potentially severe knock on effects to their credit score when failing to pay a mobile phone bill.

When it comes to borrowing covered by the Consumer Credit Act such as personal loans, lenders are legally obligated to formally contact you with a default warning letter.  For instance if you owe £800 on your Capital One credit card and for whatever reason you got behind with the payments, the legislation states you must be sent a pre-default warning letter. This official notice will clearly state that a default will be issued against your name if you don't pay or alternatively come to some form of arrangement with them within 28 days. If you settle your account or come to a deal within the 28 days there will be no default.

But when it comes to mobile phone contracts they off the radar in terms of the Consumer Credit Act which means the mobile phone companies such as EE, 02, Vodafone etc are not required to send out formal notices. Many people are unaware they have had one issued against them until they apply for a mortgage and it is brought to their attention.

What are my chances of getting a mortgage / remortgage?

Ultimately this will depend on your particular circumstances, the deposit or equity you have in your property and what your most recent credit history looks like. There are lenders out there who are more obliging and will accept defaults. The easiest route to them is through a broker. Contact us today for a free initial no obligation advice.

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