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You may be worried that you won’t be able to get a new mortgage if you have defaults on your credit file. However, even though the process will present some extra challenges, you still have a chance of securing a new deal. Getting specialist advice can make it easier to find a solution that works for you, while also helping you get matched with a lender that can benefit your situation.
Having defaults on your credit report should not prevent you from being able to apply for a new mortgage.
We work with several lenders that specialise in handling applications from people with less than perfect credit histories. There are even some lenders that will overlook certain types of defaults, especially if they were registered over 12 months ago or are below a specific value.
Others may overlook the source of the default, such as mobile phone providers. In most cases, lenders will ask for an explanation as to why the default occurred. Each lender operates differently, but when you get in touch, we can give you more guidance about what to expect from certain lenders.
Because we work with lenders who specialise in this area, you can still apply for a new mortgage if you have ‘active’ defaults on your credit report. Some lenders do not impose a time restriction, even if the default was registered as recently as a month ago. However, the number and value of defaults will play a part, for applicants to be successful, they will need to meet the other parts of the eligibility criteria, such as the loan-to-value (LTV) and affordability.
Lenders will want to know more about the reasons for the default, so it is important to provide a transparent and reasonable explanation.
For example, if the default was due to a product dispute or another justifiable reason, this may be deemed as acceptable.
On the other hand, stating that you simply forgot to pay a debt could be viewed as bad financial management, which may not be helpful for your application.
There are several factors that will influence the loan-to-value offered by a lender. If there is a record of defaults on your credit report, as we mentioned above, their age and value will be taken into consideration by the mortgage provider.
The type of property you want to remortgage is also important, as there are some applicants that will only qualify for lower rates.
To get a better idea of your potential LTV and if your property type will have an impact, get in touch with the Willows team who will be able to help.
As part of the affordability assessment, lenders will look at your credit report information related to your finances.
This involves providing details about your income and outgoings, which will give lenders a better idea of the size of mortgage they believe you can afford.
If your current debts are considered affordable and payments have been maintained, they should not negatively impact your application.
However, there are certain types of debt, such as frequent use of payday loans, which could raise concerns for lenders.
The most important thing is to be as open and transparent about your finances as possible, which will help the lender to reach the fairest decision.
Whilst there are some specialist lenders that will overlook certain types of defaults, in general, the outcome of your application will be influenced by their age and value.
It may be the case that recent defaults with higher amounts (over £5,000, for example) could lead to higher interest rates being applied to the offer.
If you have defaults that are over two years old for smaller amounts, this could help your application to be reviewed more favourably.
Lenders always carry out an assessment before deciding whether to approve or reject an application. This helps to give them a better idea of your ability to repay the mortgage without potentially defaulting.
The assessment includes asking the applicant about any defaults that are on their credit report. The explanation will help them reach a decision about your money management.
For instance, missing back to back payments because you forgot to log into a mobile app may be viewed unfavourably.
However, if the default was due to factors such as sickness, redundancy, or a genuine financial dispute, these reasons are typically more acceptable.
Using a specialist lender is not set in stone, although if you have experienced credit issues in the past, you likely stand a better chance of remortgaging through one.
The age and value of the defaults will be influential. Defaults that are older than six years may be ignored by some high street lenders, potentially making them an option.
The age and value of your defaults tend to influence the rates offered by lenders, along with the amount of equity you have in your property.
The higher the risk perceived by the lender, the higher the rates will be.
As a result, this means you should expect to pay higher rates than those offered by high street lenders. This also applies to any fees that are applied to the mortgage (such as broker and lender fees), as there is typically more work involved in processing applications with specialist lenders.
At Willows, we are fully transparent about the fees and rates applied to your mortgage, so you always know where you stand before you decide whether to proceed.
Using a mortgage broker to help you find the best deal for you can be helpful in several ways.
The goal of a mortgage broker is to help you find the best deal based on your circumstances. We offer access to mortgages starting from £10,000, and you can use our free, no-obligation quote service– all without impacting your credit score.
Alternatively, you can get in touch directly with the Willows team and we can give you a fast quote and answer any queries you have.
Getting a quote won’t affect your credit score
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At Willows Finance we ensure your personal information is kept secure and confidential.
PRIVACY OF YOUR INFORMATION
At Willows Finance Ltd, we appreciate that your privacy is extremely important to you. With this in mind, we have put in place a number of measures to ensure that any personal details we obtain from you as a result of visiting this website is processed and maintained in accordance with accepted principles of good information handling and also in accordance with the Data Protection Act 1988.
This statement provides you with details of the type of information we may hold about you, how we obtain and use information and how we protect your privacy.
Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Authorised and regulated by the Financial Conduct Authority
Firm Reference Number: 670052
Company Number: 6678545 (Registered in England and Wales)
This document outlines the services we provide. If you need clarification, please contact us at 01656 766158.
We offer first and second charge regulated mortgage contracts for business or personal use.
Other finance options may include:
Regulatory Status:
We offer an advised mortgage broking service and provide enough information for you to make an informed decision.
We are not independent financial advisers. Free debt advice is available from the Money Advice Service.
You can view our privacy policy at: https://willowsfinance.co.uk/privacy-cookie-policy/.
Lenders may also have their own privacy policies which will be provided to you.
We charge a broker fee upon loan completion. The average fee is approximately 5%, depending on your situation.
Fee details:
No refund is offered after completion. You may pay upfront or add the fee to your mortgage. Fees and commission will be detailed in your ESIS and Mortgage Agreement.
You will receive a Mortgage Agreement and an ESIS document detailing:
You may cancel your application anytime before completion without any charge. Mortgages cannot be cancelled after completion.
Missing payments can lead to charges, repossession, and negative impacts on your credit rating.
Consolidating debt may result in higher long-term interest. Securing debt against your home increases risk.
Your home may be repossessed if you do not keep up repayments on a mortgage or other loan secured on it.
If you wish to complain, contact us at:
Willows Finance Limited
Brocastle, Bridgend, CF35 5AS
Tel: 01656 766158
You may be able to refer your complaint to the Financial Ombudsman Service.
We are covered by the FSCS. You may be eligible for compensation of up to £85,000 per person per firm for mortgage advice and arranging.
More info: www.fscs.org.uk
After processing your application, you’ll receive a Mortgage Agreement and have a 7-day reflection period.
Contact us during this period with any questions. To proceed, sign and return the agreement.
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