Borrowers are generally declined by lenders for a mortgage when they see the lender is at default in their credit file. This generally happens in major financial companies or banks that reject loan applications from people with bad credit histories. However, this doesn’t mean that people with a default cannot get a mortgage.
Statistically, individuals with a low credit score are more likely to default on their loans. These defaults are marked in the credit file due to missing credit card payments or a utility bill. The default remains in the credit file for 6 years whether you pay them off or not. Still, it is possible to get a mortgage loan with the default because many lenders consider your whole application and only then focus on defaults. However, it might take some time to find the right lender.
Mortgage Experts Online provides advisors who specialize in mortgages with defaults. Their experts have enough knowledge to help you find the right mortgage in the market. The mortgage brokers on their website ensure that you get the best deal available even if you are a defaulter. You can check them on Instagram and Twitter.
Types of Default that Impact Mortgage Applications
All lenders have their criteria through which they access mortgage applications. These lenders judge the borrower through a loan default and not default on a credit card bill or utility bill.
Types of defaulters
- Less critical defaults
- Mobile phone bill
- Utility bill
- Payday loan
- Credit card bill
- Personal loan
- Lease agreement
- Bridging loan
- Mortgage secured loan
- Card Finance
Things to Remember If You Want Mortgage with A Default
- If you have a clean credit file you can borrow from the lender up to 4.5 or 5 times your income.
- A defaulter can borrow money from the lender after the lender assesses many things. If your default is for more than 3 years, you can borrow 4 times your income and some lenders also stretch 5 times your income in certain situations.
- Lenders will also assess the defaulter’s income bills and other sources to get an idea of how that person is managing his/her expenses. Based on which the lending amount will be decided.
- If you are a defaulter, seek help from a mortgage advisor before applying for a mortgage. Mortgage advisors will first find out the right lender for you and will also so tell you exactly what the lender is looking for so that you can prepare documents that will help in approving the loan immediately.
- If the default on your credit file has been for a long time, for example, six years, then it is removed from your credit file and the mortgage application moves smoothly.
- A mortgage application is affected if there are two defaults within two years in the borrower’s credit file.
Whether you apply for a mortgage or not, it is always good to keep your credit file updated. Good credit files not only help you in getting a mortgage it also helps you in getting any credit card or finances easily.