Mortgages With Defaults On Your Credit File

A default notice is a formal letter sent to you by a lender or creditor when you’re in arrears with your repayments to them. They are generally issued if you have missed 3 or  sometimes 6 successive payments They are legally obliged to let you know in writing when you have missed payments.

If you’re in a credit agreement that’s regulated by the Consumer Credit Act 1974 (CCA 1974) and you default on your payments, your creditor must first issue a default notice before they can start legal action against you to recover the debt.

To find out whether your credit agreement is regulated by CCA 1974, you can check the agreement itself, or contact your creditor to ask them.

If you have not repaid the arrears or set up a repayment agreement with your creditor within 14 days of receiving the notice of default form, your credit agreement can be terminated and the default will be registered on your credit file for 6 years.

The creditor will then be legally entitled to demand early repayment of the whole outstanding balance. They can begin the legal process that could result in you being taken to court for a County Court Judgment (CCJ) which orders you to immediately pay the whole outstanding debt in full, or by instalments. The County Court Judgment (CCJ) would also be registered on your credit file which can have a negative impact on you borrowing in the future

The two main credit reference agencies are “Experian” and “Equifax”.

They will both rate you individually between 0-999.

Most high street lenders rely on credit scoring to form a lending decision.

Up to 350 points can be deducted from your credit score if a credit agreement goes into default.

This depends on various factors:

The date the default occurred

The size of the default

Whether the default has been paid off in full or not.

Examples,

if the default occurred over 2 years ago, irrespective of the amount owed a 10% deposit is sufficient even if the default is left unpaid. If it more recent then normally 15% is required

If the default is fully repaid & was for an amount under £500 at the time, there is a possibility we can arrange for this to be agreed with a 5% deposit

A default will stay visible on your credit report for a period of six years, even if you have have repaid the debt in full.

To enable us to accurately source the most suitable mortgage deal & obtain the lowest possible interest rates that take into account your own situation we will normally need to assess a detailed copy of your credit file 

To access this for free CLICK HERE

Every lender has their own in house criteria. Some will accept you immediately, others will need it to be removed from your credit file after 6 years.

Once a default is recorded on your credit profile, you cannot remove this unless it was registered against you in error. However, by repaying it in full it might mitigate its negative impact. Our free credit file review will determine this.

Usually the date, size and amount of defaults showing on your credit file coupled with the deposit or equity you have will determine the rate offered to you.

Here are some top tips for improving your score:

1. Pay off any outstanding debt in full (including credit cards, loans, and similar). If that’s not possible, just pay as much as you can.

2. Make sure you’re listed on the electoral roll. 

3. Consider reviewing the number of credit cards and accounts you’ve got open. Even if they don’t have outstanding balances. 

4. Use your available credit in a sensible way. For example, make small purchases on your credit card and pay off the balance in full each month. That can help build your score because it shows that you’re making repayments on time.

Speak with us on 03300438038 to book in a friendly no obligation 30 minute telephone appointment at your convenience.

Alternatively email  [email protected] outlining your overall requirements.