Can you get a mortgage with a default?

What a default actually is

A default is the lender you owe money to formally ending the credit agreement because you have not kept to it. It is a private matter between the two of you. No court is involved, nobody takes you anywhere, and that is the main thing separating it from a judgment.

Before it happens you should receive a default notice, which is a warning with a deadline attached. If the deadline passes without the account being brought up to date, the agreement is terminated and the entry is registered. Many people do not remember receiving one, because by that stage the post is often going unopened.

The date that starts the clock is not the one you think

The six years run from the date of default — the day the lender recorded the default, usually three to six months after payments stopped — not from the month your payments first went wrong, and not from the day you eventually cleared it.

Those can be a long way apart. Payments might have been missed for six months before the lender acted, and the debt might have sat unpaid for two years afterwards. The clock cares about neither. It starts the day the default was registered and it runs for six years regardless of what you do next.

This is worth being precise about, because people routinely believe they are a year clearer than they are, or a year further away than they are. Both mistakes are expensive: one leads to an application that fails, the other to waiting for something that has already passed.

Satisfied, partially satisfied, and still outstanding

• Satisfied. Paid in full. The entry stays until its six years are up, but it is marked as settled, and a great many lenders treat that very differently from an unpaid one.
• Partial settlement. If you agreed a reduced figure, the entry can be marked to show the debt was settled for less than the full amount. It is better than leaving it outstanding, and it is not the same as satisfied. Some lenders read it closer to unpaid than paid, so it is worth knowing which you have.
• Still outstanding. The hardest version, and the one most within your power to change before anybody applies.

Two things that confuse almost everybody

Defaults arrive in groups. One difficult period — a job lost, an illness, a separation — usually produces several defaults within a few months of each other, because everything fails at once. Lenders can tell the difference between that and a pattern of defaults spread across several years. The first reads as one event with a cause; the second reads as a habit. If yours cluster around a single period, say so, because it genuinely changes how the case is presented.

The debt often gets sold. Lenders sell defaulted debts to purchasers, who then appear on your file in their own right. It can look as though you have two problems where you have one. Worth checking, because an unpicked duplicate makes a file look worse than it is.

Are telecoms defaults really treated differently?

Often, yes. A defaulted mobile phone contract for a modest sum, from a moved house and a final bill nobody saw, is not read the same way as a defaulted loan or credit card. Some lenders discount small non-credit defaults, some set a value below which they ignore them, and some make no distinction at all.

That is genuinely useful to know, and it is also exactly the kind of thing that changes without announcement — which is why you will not find a table of it here, or anywhere else that is still accurate.

What the lender weighs up

The variables are the same ones that apply to any adverse entry: how long ago, how large, whether it is settled, and how much deposit you have. Rather than repeat that here, it is set out in full on the page about CCJs, and the same logic applies to defaults with one difference — the bar is generally lower. A default is a more ordinary thing to have than a judgment.

The practical version: find the exact date of default and the exact amount, establish whether it shows as satisfied, partially settled or outstanding, and check whether the same debt appears twice. Then approach one lender that fits.