Can I get a mortgage with a Default?

Can I get a mortgage with a default?

Are you looking to buy a new home but worried that your credit history might hold you back? If you have defaults on your credit file, you might be concerned about your chances of getting approved for a mortgage. But don’t lose hope just yet, here at The Mortgage Masters we can help.

What is a Default

A default is a negative mark on your credit file that occurs when you fail to make payments on a loan or credit agreement. It can stay on your credit report for up to six years and can significantly impact your creditworthiness.

When it comes to getting a mortgage with defaults, it’s important to understand that mainstream lenders typically prefer borrowers with a clean credit history. However, that doesn’t mean you won’t be able to find a mortgage. There are specialist lenders and here at The Mortgage Masters we cater to individuals with bad credit, including those with defaults on their credit file.

We have access to a wider range of mortgage products and specialist lenders who are willing to consider applicants with defaults. They understand that everyone’s financial situation is unique and are more likely to take into account the circumstances surrounding your default rather than simply rejecting your application based on your credit score alone.

How could a default impact my mortgage application?

Before we dive into how to improve your chances of getting a mortgage with defaults, let’s first understand how a default can impact your mortgage application.
When assessing your mortgage application, lenders will typically look at various factors, including your credit history, income, employment status, and the size of your deposit. Defaults on your credit file can raise concerns for lenders as it indicates a higher level of risk.

However, having a default on your credit file doesn’t necessarily mean you’ll be rejected for a mortgage, but it does make the process more challenging. Lenders may offer less favourable terms, such as higher interest rates or requiring a larger deposit to offset the risk they perceive.

Factors to Consider When Applying for a Mortgage with a Default

When applying for a mortgage with defaults, there are several factors you should consider:

The severity of the default

The severity of the default can play a role in whether or not a lender is willing to approve your mortgage application. For example, a minor default that occurred several years ago may be viewed less harshly than a recent major default.

The reason for the default including any mitigating factors

Be prepared to provide an explanation for the default and any mitigating factors that may have contributed to the situation. This could include unexpected life events, such as job loss or illness, which impacted your ability to make payments. Demonstrating that the default was a one-time occurrence and not indicative of your overall financial responsibility can help strengthen your application.

Loan-to-Value Ratio (LTV)

The loan-to-value ratio refers to the size of the mortgage loan compared to the value of the property you’re purchasing. Lenders may be more willing to approve a mortgage with defaults if you have a higher deposit, as it reduces their risk. Aim for a higher deposit to improve your chances of approval.

Seeking Professional Advice

Working with a specialist mortgage broker who has experience dealing with borrowers with defaults can greatly increase your chances of finding a suitable mortgage. They can guide you through the process, help you find lenders who are willing to consider your application, and negotiate on your behalf.

How can I improve my mortgage chances with a default?

While getting a mortgage with defaults may be challenging, there are steps you can take to improve your chances:

Check Your Credit Report

Start by checking your credit report to ensure all the information is accurate. If you notice any errors or inaccuracies, contact the credit reference agencies to have them corrected.

Pay off Outstanding Debts

If you have any outstanding debts, focus on paying them off before applying for a mortgage. This shows lenders that you’re taking steps to improve your financial situation and reduces your overall debt burden.

Build Up Your Savings

A larger deposit can help offset the impact of defaults on your mortgage application. Aim to save as much as possible before applying for a mortgage to increase your chances of approval.

Demonstrate Stable Income

Lenders want to see that you have a stable source of income that is sufficient to cover your mortgage repayments. Stay in regular employment and avoid changing jobs before applying for a mortgage.

Avoid Making Multiple Applications

Making multiple mortgage applications within a short period of time can negatively impact your credit score. Each application leaves a footprint on your credit file, so it’s important to only apply for mortgages you’re confident you’re eligible for.

Why Specialist Lenders and a Mortgage Brokers can help improve your mortgage chances when you have a default.

If you’re struggling to find a mainstream lender who will consider your mortgage application with defaults, it’s worth exploring specialist lenders and mortgage brokers.

Specialist lenders cater specifically to borrowers with bad credit and have more flexible lending criteria. They understand that people’s circumstances can change and are willing to consider applications from individuals with defaults on their credit file.

The Mortgage Masters have access to a wide range of lenders and products tailored for individuals with defaults. We can assess your situation, recommend suitable lenders, and negotiate on your behalf to help secure the best possible mortgage deal.

While getting a mortgage with defaults may require some extra effort, it’s not impossible. By understanding the impact of defaults on your application, taking steps to improve your financial situation, and seeking advice from The Mortgage masters, you can increase your chances of achieving your dream of homeownership.