Defaults are one of the most common forms of adverse credit in the UK, and having one or more on your credit file does not necessarily mean you cannot get a mortgage. Many people with defaults on their credit history successfully secure mortgage lending every year, particularly through specialist lenders who take a more nuanced view of credit issues. The key factors lenders consider are whether the default has been satisfied, how long ago it was registered, the amount involved, and the type of credit it relates to.
For a complete overview of how adverse credit impacts mortgage applications, read our complete guide to bad credit mortgages.
What is a Default?
A default is formally registered on your credit file when a lender or creditor considers that you have broken the terms of your credit agreement, usually after a sustained period of missed payments. Most lenders will issue a default notice after three to six consecutive missed payments, though the exact timing varies by creditor.
Once registered, the default remains on your credit file for six years from the date it was recorded, regardless of whether you subsequently pay the debt. Defaults can appear on a wide range of credit products, including:
- Credit cards
- Personal loans
- Mobile phone contracts
- Utility bills (gas, electricity, water)
- Catalogue or store finance accounts
- Gym memberships and other subscription services
- Overdrafts
It is worth noting that mortgage lenders typically distinguish between defaults on financial credit (credit cards, loans) and defaults on non-financial obligations (utilities, mobile phones). Defaults on financial credit are generally viewed more seriously.
Some people do not even realise they have a default on their credit file. If you were unaware of a default, check whether the creditor sent the required default notice to your correct address. If they did not, you may have grounds to dispute it with the credit reference agency.
Satisfied vs Unsatisfied Defaults
As with CCJs, the distinction between a satisfied (paid) and unsatisfied (unpaid) default is critical to your mortgage options:
| Factor | Satisfied default | Unsatisfied default |
|---|---|---|
| Definition | The defaulted debt has been paid in full | The defaulted debt is still outstanding |
| Credit file notation | Marked as "satisfied" with a satisfaction date | Shown as open/outstanding for 6 years |
| Mainstream lenders | Some may consider if over 3–4 years old | Almost universally declined |
| Specialist lenders | Widely accepted, especially if 1+ year old | Some will consider, but options are limited |
| Deposit impact | 10–20% depending on age and number | Typically 20–25% required |
| Rate impact | Moderate premium over clean credit rates | Higher premium, fewer competitive options |
If you have unsatisfied defaults, paying them off before applying for a mortgage is one of the most effective steps you can take. Once the debt is cleared, contact the original creditor and ask them to update the credit reference agencies with the satisfaction date.
How the Age of a Default Affects Your Options
The date the default was registered is recorded on your credit file, and lenders pay close attention to how long ago this was. As with most adverse credit, the older the default, the less weight it carries:
- Under 12 months old: Recent defaults significantly limit your options. Only a small number of specialist lenders will consider applications with defaults registered in the last year. Expect to need a larger deposit and to pay higher rates.
- 1–2 years old: More specialist lenders become available, particularly for satisfied defaults. If the default is on a non-financial account (e.g., a mobile phone or utility bill), some near-prime lenders may also consider your application.
- 2–3 years old: A significantly wider range of lenders will consider you, and rates start to become more competitive. With a satisfied default of this age and a clean record since, your options are reasonable.
- 3–6 years old: Options continue to broaden. Some mainstream lenders may consider a single, small, satisfied default that is more than three or four years old, particularly with a good deposit and clean credit otherwise.
- Over 6 years old: The default is removed from your credit file and should no longer affect your mortgage application.
A default is recorded on the date the default notice is issued, not the date of the first missed payment. The six-year clock starts from this registration date, regardless of when the debt is eventually paid.
Number of Defaults and Amounts Involved
Having a single default is viewed very differently from having multiple defaults. Similarly, the total value of your defaulted debts matters. Most specialist lenders have specific criteria around both:
- Single default under £500: The most straightforward scenario. Many specialist and some near-prime lenders will work with this, particularly if satisfied and over 12 months old.
- 2–3 defaults, total under £2,000: Still workable with a reasonable number of specialist lenders, especially if all are satisfied and you can explain the circumstances.
- Multiple defaults totalling £5,000+: More challenging, but specialist lenders still exist for this scenario. A larger deposit and strong current income will be important.
- Defaults combined with other adverse credit: If you have defaults alongside CCJs, an IVA, or other issues, lenders will look at the overall picture. Read our guides on mortgages with CCJs and mortgages with IVAs for more information.
How to Improve Your Chances of Getting a Mortgage with Defaults
- 01
Satisfy all outstanding defaults
Paying off the defaulted debts in full is the single most impactful action. Contact each creditor, arrange payment, and request they update the credit reference agencies with the satisfaction date.
- 02
Check all three credit reports
Obtain your full credit file from Experian, Equifax, and TransUnion. Verify that all defaults are accurately recorded with the correct dates, amounts, and satisfaction status. Dispute any errors promptly.
- 03
Distinguish financial from non-financial defaults
When speaking with your broker, note which defaults are on financial products (credit cards, loans) and which are non-financial (utilities, phone contracts). Some lenders treat these very differently.
- 04
Demonstrate improved financial behaviour
A clean credit record since the defaults shows lenders that the issues are in the past. Avoid missing any payments, keep existing accounts in good standing, and reduce your credit utilisation.
- 05
Save a competitive deposit
For satisfied defaults over 2 years old, a 10–15% deposit may suffice with some specialist lenders. For more recent or unsatisfied defaults, aim for 15–20% or more.
- 06
Work with a specialist broker
A broker who understands how different lenders treat defaults can target the right lender for your specific situation — the number, age, value, and type of defaults all influence which lender is the best fit.
What Interest Rates to Expect
The interest rate you will be offered depends on the number, value, recency, and satisfaction status of your defaults, as well as your deposit and overall financial profile. As a rough guide:
- Minor defaults (1–2 satisfied, over 2 years old): You may pay only 0.5–1.5% above the best mainstream rates.
- Moderate defaults (multiple or recent): Expect 1.5–3% above mainstream rates.
- Significant defaults (unsatisfied, high value, or combined with other adverse credit): Rates could be 3–4%+ above mainstream rates.
As with all adverse credit mortgages, these are not permanent arrangements. Plan to maintain a perfect payment record and remortgage to a better deal after two to three years when your credit position has improved. Use our mortgage calculator to see how different rates affect your monthly repayments.
If your defaults are relatively old and you have maintained clean credit since, you may be closer to mainstream rates than you think. A specialist broker can quickly tell you where you stand and what rates are realistically achievable for your situation.
- Defaults are one of the most common forms of adverse credit — having them does not mean you cannot get a mortgage.
- Satisfied defaults are viewed far more favourably than unsatisfied ones. Pay them off before applying if you can.
- The age of the default matters hugely — options improve significantly after 12 months and continue to improve over the 6-year period.
- Financial defaults (credit cards, loans) are treated more seriously than non-financial defaults (utilities, phone contracts).
- A deposit of 10–20% is typically sufficient for older, satisfied defaults; unsatisfied or recent defaults may require more.
- A specialist broker can match your specific default profile to the right lender, saving time and avoiding unnecessary credit searches.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.