Can you get a mortgage with a default?
Getting mortgages with defaults on your credit record is possible! However, lenders will consider some key factors before they make a decision, including:
- The size of the default: Smaller defaults may have less impact than larger ones.
- When it was registered: Older defaults generally carry less weight, especially if you’ve improved your credit since then!
- Your deposit amount: A larger deposit can increase your chances of approval.
- Your recent borrowing behaviour: If you can demonstrate responsible financial habits, this may reassure lenders
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- What is a default notice?
- How long do defaults stay on your credit file?
- Can a default be removed from your credit report?
- Getting a mortgage once the default has been removed
- Improving your chances of getting a mortgage with a default
- How long after a default can you get a mortgage?
- Lender criteria for borrowing with a default
- How much deposit do you need?
- Extra costs to expect if you’ve had a default
- Mortgage lenders that accept defaults
- Using a mortgage broker if you have a default
- What to do next
- FAQs
What is a default notice?
A default notice is a letter from your lender telling you that you’ve missed payments on your loan or credit agreement. You’ll usually get this after missing 3 to 6 payments or if you haven’t paid the full amount due.
It’s a legal requirement for lenders to send this notice, but it doesn’t mean at this stage that court action has started. However, if your debt remains unpaid, it could lead to a County Court Judgment (CCJ), which may affect your mortgage options [1].
A default notice only applies to debts covered by the Consumer Credit Act [2].
- The part of the agreement you’ve broken.
- How much you need to pay to fix the issue.
- The deadline for making the payment.
- What could happen if you don’t pay.
- How long you have to respond (usually 14 days).
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How long do defaults stay on your credit file?
A default stays on your credit report for six years, even if you’ve paid it off. After that, it’s no longer on your report [3].
But, be careful – if a debt gets sold to a collection agency, they might re-register it as a new debt, and it could stay on your report longer.
The good news is, you don’t have to wait six years before applying for a mortgage. Even with a default, you could still be eligible – it’s all about your current situation.
Can a default be removed from your credit report?
Yes, you can have a default removed from your credit report by paying off the balance after getting the notice. If you can, it’s a good idea to clear the outstanding amount.
Even if you pay it off, it will still show as a late payment on your report, but it’ll look better than leaving it unpaid. If you’re struggling to pay the full amount, get in touch with your creditor. They may let you pay in instalments.
Getting a mortgage once the default has been removed
As long as you don’t have any more credit problems and meet the lender’s requirements, your chances of securing a mortgage will go up once your default is removed from your record.
Even though your credit history might not be perfect, having a larger deposit and a stable income will increase your chances of unlocking a good deal.
What if your default is ‘satisfied’?
Even if your default is marked as ‘satisfied’, some lenders focus more on how long it’s been since the default rather than whether it’s been paid off. But don’t worry – having a satisfied default still shows lenders that you’re taking steps to fix your finances.
A mortgage broker with experience can help you find the right lenders for your situation. So, if you’ve had a default and are thinking about getting a mortgage, why not get in touch with us today?
Improving your chances of getting a mortgage with a default
Before applying for a mortgage after having defaults, there are things you can do in order to maximise your chances of having a successful application.
Improving your recent credit
Taking steps to improve your credit score is a great way to show lenders you have taken control of your finances and you are now a more responsible borrower.
Provide a larger-than-average deposit
Saving up that extra bit of deposit can actually save you money in the long run. If you’re able to put down more money, lenders will see you as less risky. On top of this, you can sometimes unlock lower interest rates, in turn saving you money in mortgage payments over the long term.
Consult a specialist bad credit mortgage broker
There are plenty of reasons why using a mortgage broker can boost your chances of success. This includes:
- Knowledge of and access to suitable lenders that specialise in mortgages for people in your situation.
- We can suggest potential ‘weak areas’ in your application and help you to fix them.
- Our brokers use their expertise to consult with lenders, ensuring you obtain the most favourable deal based on your situation.
How long after a default can you get a mortgage?
It might be possible to get a mortgage within a year, depending on the default. The longer you wait, the better your chances. After six years, applying for mortgages becomes easier with improvements to your credit rating.
Defaults have less impact on a mortgage application than things like a bankruptcy [4] or an IVA [5] but they can still affect your application.
A high street lender may turn you down, but specialist lenders who work with bad credit applicants can be more flexible. These lenders often work through intermediaries (like us!), so partnering with a mortgage broker who understands your situation and knows the best options for you is the best way to find the right deal for you.
Lender criteria for borrowing with a default
When deciding how much they’re willing to lend you, lenders consider several factors:
- Your income: Lenders want to see how much you earn to make sure you can afford the mortgage payments.
- Your outgoings: They’ll look at how much you spend on things like:
- Household bills
- Groceries
- Car finance
- Childcare
- Commuting, etc.
- Your documents: Lenders usually ask for 3-6 months [6] of bank statements to get a clear picture of your spending [7].
- Your deposit: The larger your deposit, the more you may be able to borrow. A bigger deposit reduces the lender’s risk
- How recent your default is: If you have a default, lenders will also look at how recent it is. The longer it’s been since the default, the better.
Typically, if you have defaults, you might be looking at being able to borrow around 3 to 4 times your income. This depends on how serious the defaults were and how long ago they happened. However, if your financial situation has improved since then, you may be able to borrow more.
Someone applying with good credit could expect to borrow up to 5 times their annual income.
This is where working with a mortgage broker can really help. We have access to specialist lenders who are more understanding of your situation and may be able to offer you better terms based on more than just your credit score.
Do default balances affect how much you can borrow?
A key part of the mortgage application process is the affordability assessment, when the lender will look at your current liabilities compared to your income and gauge what you will be able to pay monthly for your mortgage.
Their decision will also be influenced by the number of defaults and their age. If you have a number of defaults, as well as other current financial commitments, it’s likely they will offer you less and you will be asked to provide a larger deposit.
Lenders will always consider how long ago various defaults happened, what has changed since then, and take a view on the risk they are taking now.
How much deposit do you need?
| Time Since Default | Typical Deposit Required | What to expect |
|---|---|---|
| Less than 1 year | 15% or more | Fewer lenders available, higher deposit likely needed. |
| 1–2 years | Around 15% | Some lenders may accept 10% if other criteria are strong. |
| 2–3 years | Around 10% | More options open up if recent credit history is good. |
| 3+ years | 5–10% | Similar rates to standard mortgages may be available. |
Lenders have different criteria, and the size of your default matters. The best way to fully understand your options is to speak to an expert with experience. Get in touch for a free initial consultation with one of our team to see what’s possible for you!
Extra costs to expect if you’ve had a default
Your deposit is the biggest cost when getting a mortgage, but there are a few other things to budget for.
The good news? Having bad credit doesn’t automatically mean loads of extra fees. But there are some added costs to be aware of, like:
- Higher Interest Rates: Lenders see bad credit as a risk, so they often charge higher rates to protect themselves.
- Credit Repair Costs: If you’re working on improving your credit score, you might pay for things like credit reports or financial advice.
- Broker Fees: We do charge a fee for our service, but we’re always upfront about any costs before you move forward.
How much extra you’ll pay depends on how serious your default was and how long ago it happened. A recent default will have a bigger impact than a few missed phone bill payments from years ago.
Want to know exactly what to expect?
Mortgage lenders that accept defaults
If you have a default on your credit record, getting a mortgage from a high street bank can be tough. Most mainstream lenders prefer borrowers with clean credit histories, but that doesn’t mean you’re out of options.
Specialist lenders focus on helping people with bad credit. They’re more flexible and may accept defaults, even if they happened within the last 12 months. However, these lenders don’t advertise directly to the public – you’ll usually need to apply through a mortgage broker who works with them.
If your default was a few years ago and your credit has improved, you might qualify for a mortgage with a more mainstream lender. Speaking to an expert before applying can help you understand your options and improve your chances of approval.
Using a mortgage broker if you have a default
Unlimited specialist mortgage brokers like us have access to the whole market and exclusive interest rates from lenders not found on the high street. You’ll be able to:
- fully consider your options,
- get personalised mortgage advice from someone who completely understands your situation,
- and even get assistance with your mortgage application.
Your best chance of finding a bad credit mortgage with defaults is to contact a specialist broker. At The Mortgage Centres, our team of specialists know the market inside out. We can turn to exactly the right providers to get the best deals for mortgages with defaults.
Get in touch today to set up your free initial consultation and get a no-obligation quote.
What to do next
Now that you have a clearer picture of how defaults impact your mortgage options, here are some practical steps to take next:
- Check Your Credit Report: Knowing exactly where you stand is the first step. Get a detailed credit report from Checkmyfile to see what lenders will be looking at.
- Start Saving for a Deposit: A bigger deposit can open up better mortgage deals, so if possible, start putting more aside now.
- Work on Your Credit Score: If your credit history has some bumps, take steps to improve it. Small changes like making payments on time and reducing outstanding debts can make a big difference.
- Speak to a Specialist Mortgage Broker: Navigating the mortgage world with a default can be tricky, but you don’t have to do it alone. Our expert brokers can match you with the right lenders and help you find the best deal for your situation.
- Explore Your Mortgage Options: Ready to take the next step? Find out what’s possible by getting in touch with our team today for a no-obligation chat.
FAQs: How a default will affect your mortgage application
Yes, you can remortgage even with defaults. The process is similar to getting a regular mortgage, so the same rules will apply.
Some lenders look at your whole situation, not just the default. What matters is:
- How much you owe,
- What kind of loan it was,
- Which lender you had the default with.
If you defaulted with the same lender, they might turn down your remortgage application. It’s better to go with a specialist lender if you have a default.
How long ago the default happened also makes a difference. Defaults from the past year will be taken more seriously than those from 3 or 4 years ago. The longer you wait, the more chances you have to improve your credit. Some lenders are more flexible and may consider your application even if the default is recent.
The impact a default has on your credit history will depend on the kind of credit facility you are trying to get.
But, in the case of a mortgage, a lender will also consider when the default occurred and how much for, as well as other aspects of your current situation, before deciding.
It may influence the outcome but will not prevent you outright from getting a mortgage.
The key thing to remember here is that it is the defaults in the last year or two that matter most [7]. If the default was within the last year, from our experience, lenders will generally not want to see anything over £1,500.
If the default is over a year old, lenders are less likely to worry about the amount. Lenders will usually accept two defaults within the last two years, but after that it isn’t critical.
Yes, some defaults are more severe than others. All mortgage lenders will view any defaults on secured loans or home loan payments as very serious. They will factor this into their assessment when deciding to offer you a mortgage [8].
Defaults on smaller amounts or things like mobile phone or mail order accounts will be viewed in a more relaxed way. Defaults on credit cards or personal loans fall into a middle ground, and leniency varies from lender to lender.
This can happen in cases where your debt has been sold on to a debt collection agency. The original creditor should have marked it as ‘satisfied’, and the debt collector should re-register the default, flagging it as ‘debt assigned’, to show what has happened to anyone checking your credit report [9].
Interestingly, even if it is re-assigned, the debt only stays on your report for six years from the time it was originally registered, not re-registered, after which it drops off.
References
- Gov.uk. (July 3, 2015). County Court Judgments (CCJs) and your credit rating. Retrieved March 21, 2025, from https://www.gov.uk/
- Consumer Credit Act 1974, c. 39, s. 87. (1974). Retrieved March 21, 2025, from https://www.legislation.gov.uk/
- Checkmyfile. (October 28, 2024). How long does information remain on my credit report? Checkmyfile Help Centre. Retrieved March 21, 2025, from https://www.checkmyfile.com/
- StepChange Debt Charity. (n.d.). Bankruptcy and my credit rating. Retrieved March 21, 2025, from https://www.stepchange.org/
- StepChange Debt Charity. (n.d.). How an IVA affects me. Retrieved March 21, 2025, from https://www.stepchange.org/
- Financial Conduct Authority. (January 1, 2022). SUP 16 Annex 19B: New business profile. Retrieved March 21, 2025, from https://www.handbook.fca.org.uk/
- Financial Conduct Authority. (January 1, 2022). SUP 16 Annex 19B: Impaired credit history. Retrieved March 21, 2025, from https://www.handbook.fca.org.uk/
- Information Commissioner’s Office. (February 19, 2025). Credit. Retrieved March 21, 2025, from https://ico.org.uk/
- SCOR (Steering Committee on Reciprocity). (2024, June). Principles for the Reporting of Arrears Arrangements and Defaults at Credit Reference Agencies version 2a final [PDF document]. SCOR Online. Retrieved March 21, 2025, from https://www.scoronline.co.uk/
Phil Scott
Director
About the author
Phil has worked in the financial services industry since 1992, having started with a large insurance company. He went self employed in 1996 as an Independent Financial Adviser before setting up his first company, Needham Market Home Financial in 1999.
After four years, he decided to concentrate solely on mortgages and related insurances, and The Mortgage Centres was born. Since then, Phil has been influential in the opening of several new offices as the business continues to grow.
Qualifications
Financial Planning Certificate: 1, 2 & 3
Year Attained: 1992
Certificate in Mortgage Advice and Practice (CEMAP)
Year Attained: 2001
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