A financial default occurs when a borrower has violated the terms of the credit agreement by failing to make scheduled payments in the correct amount and on time. If this happens, the lender might issue a default notice, which could then affect your credit record. However, you can convert this into a “satisfied default” by settling the associated debt – the sooner, the better.
Can I get a mortgage with a default?
Your credit history plays a significant role in securing a mortgage. If you have defaulted on your credit, it gives potential lenders an impression of unsteady monthly repayments, making you a risky investment.
However, securing a mortgage with a default isn’t impossible, particularly with expert guidance from a reputable mortgage broker in Manchester like us. Showing proof of a satisfied default can improve your prospects, as you are demonstrating a proactive approach towards enhancing your credit status.
Interestingly, many lenders focus more on the date of the default rather than its fulfilment. Recent defaults may deter lenders, but a default dating back five years could be viewed more leniently.
What impact does a default have on my mortgage application?
Still, defaults can limit your accessibility to lenders, as not all cater to applicants in need of bad credit mortgage advice in Manchester. We are fortunate to collaborate with an array of mortgage lenders, some of whom provide solutions to applicants with defaults. The disadvantage is that you could be charged a higher interest rate initially. Yet once remortgaging becomes feasible, a better deal and a more desirable interest rate could be within reach.
Does the type of default make a difference?
Furthermore, the nature of your default may make a difference depending on a lender’s disposition. For instance, a default on a mobile phone payment might be considered less severely than defaults on car or mortgage payments. Ultimately, any form of default signifies a potential for unreliable repayments, a red flag for lenders considering substantial loans.
Unsatisfied defaults further narrow your options, yet bad credit mortgages remain a likely solution. As mentioned earlier, lenders tend to prioritise the default’s date over its repayment.
What if I’ve not satisfied my default?
A default will stay on your credit file for six years from its issuance, regardless of whether it’s satisfied. This does not mean obtaining a mortgage within that period is impossible. There are bespoke mortgage solutions that you can explore with the help of a specialist mortgage advisor in Manchester.
Immediately after a default, you should focus on improving your credit score. Once the six-year period passes, you’ll have a wider selection of mortgage lenders offering better deals.
Tips For Improving Your Credit Score
Tips to improve your credit score, prioritising the repayment of the debt linked to your default is paramount. Being on the electoral roll, maintaining regular repayments, and managing your finances diligently will also help. Obtaining the lowest limit credit card from your bank for necessary expenses and ensuring its complete monthly repayment can gradually improve your credit score.
As a mortgage broker in Manchester, we extend our expertise to those with defaults who are seeking mortgage advice and options. Schedule a free mortgage appointment today to see how we can help.
Date Last Edited: November 8, 2024
