Mortgages with defaults
Getting a mortgage with a default is possible, but finding the right mortgage lender is no mean feat. Luckily, the team at CLS Money have years of experience in securing mortgage deals for clients who have previously failed to meet the obligations of a loan or finance agreement.
If you have missed payments, such as failing to pay a succession of bills from a utility company or missing one or more mortgage payments, the account holder can choose to close down your agreement with them, otherwise known as a default.
It can happen for several reasons, some of which are out of your control. But, the main thing is it will almost certainly leave a lasting mark on your credit file, even if it’s been marked as ‘satisfied’, which unfortunately means mortgage companies will be less inclined to lend to you if you want to purchase a home or remortgage your existing property.
When it comes to getting a mortgage with a default, it’s vital to ask for help and advice before you start speaking to mortgage providers. Heading straight to the nearest High Street lender will most likely result in disappointment, as these organisations often have strict lending criteria and are less willing to consider those with a poor credit history and a low-scoring credit report.
What a default means to your credit report
When you default on any payment, whether that's a utility bill, a loan, or even your mortgage, the creditor will use the power available to them to recover the money. If you can't pay, it's worth trying to arrange a payment schedule that you can comfortably manage, otherwise they're likely to pass the debt to a debt collection agent or take you to court. If the loan was for a car or your rent, it's likely that the car will be possessed and you may be asked to move out.
Your creditor wants to recover their money the simplest way possible, so they should be understanding of the situation and try to help you pay in a schedule that works for both of you.
However, missing payments leaves a lasting mark on your credit report. Only if you clear the balance within the timeframe set in your default notice can you apply to have it removed.
How long does a default stay on a credit file?
Defaults stay on your credit report for 6 years. During that time, you'll find it harder to achieve credit and especially at preferable rates. However, as experts at matching specialist lenders to those who need a little extra help, we work with mortgage providers that understand life isn't always straightforward, and if you can show you're in a better financial position, able to manage a mortgage, they'll match a mortgage to what you can comfortably afford.
Getting a mortgage with a default
Defaults are the most common reasons for mortgages to be declined, but, thankfully, because they aren't quite so damaging as other forms credit failure—such as IVAs, DMPs, or bankruptcy—there are mortgage lenders who will provide finance to buy a home. Admittedly, they won't offer the same competitive rates as a clean credit file could achieve, but when the default expires, there's no reason why you can't remortgage and apply for better mortgage rates when your score improves.
Given that high street lenders will almost certainly reject your application immediately, a mortgage broker has access to a wide range of specialist lenders, happy to lend to applicants with adverse credit, and those with an active or satisfied default.
CLS – We'll find the specialist mortgage lender you need
Here at CLS, our expert mortgage brokers have access to a wide range of mortgage providers, including those who specialise in mortgages for customers with defaults and any other kind of adverse credit and will be able to point you in the direction of a lender who is less likely to decline your application. We can also help you complete an application that ticks all the right boxes and maximises your chances of being approved.
Whatever mortgage advice you need, we're ready to answer your questions. Give us a call today; CLS works with many lenders who understand how easy it can be to accrue missed payments, and accept defaults as part of their process—there could be a mortgage offer for you just around the corner.