The effect of a default on mortgage application

aimingforadebtfreelife

After a couple of years of hard work I have cleaned up my credit file all apart from 1 default.

My credit report shows all accounts up to date and no late payments. My CCJ has just dropped off my credit file. It is still showing 1 default (credit card) which is not satisfied which I am paying off. (£7k still showing).

I am looking at a 90% mortgage on a £125k purchase price. yes I could clear off the card with my deposit but then I'm back to square one trying to save for another deposit.

What are the chances of a mortgage in todays market with 1 default? All my other accounts - there is one active active credit card all clear and up to date and utilities showing on file - there is no other borrowing.

Many thanks in advance.

GMS

aimingforadebtfreelife wrote: »

After a couple of years of hard work I have cleaned up my credit file all apart from 1 default.

My credit report shows all accounts up to date and no late payments. My CCJ has just dropped off my credit file. It is still showing 1 default (credit card) which is not satisfied which I am paying off. (£7k still showing).

I am looking at a 90% mortgage on a £125k purchase price. yes I could clear off the card with my deposit but then I'm back to square one trying to save for another deposit.

What are the chances of a mortgage in todays market with 1 default? All my other accounts - there is one active active credit card all clear and up to date and utilities showing on file - there is no other borrowing.

Many thanks in advance.

Nigh on impossible for a 90% LTV mortgage with a 7k default. Payments being made towards it would also need to be taken into account for an affordability calculation.

Need 20% minimum deposit to have any chance

aimingforadebtfreelife

Many thanks for your reply.

I'm saving hard so hopefully 20% will be achievable. I am also looking at the route I have read about where a favourable F+F settlement was offered on condition credit file entry removed which apparently worked. Anything is worth a shot I suppose!!

GMS

aimingforadebtfreelife wrote: »

Many thanks for your reply.

I'm saving hard so hopefully 20% will be achievable. I am also looking at the route I have read about where a favourable F+F settlement was offered on condition credit file entry removed which apparently worked. Anything is worth a shot I suppose!!

Catch 22 situation for you re the default. You are making payments so the lender will be happy to collect the full amount over time. To settle for a full and final they would usually want it to be a last resort, i.e you were not making payments or making them eratically.

If you stop making payments they may mark the credit file accordingly and cause you further issues with any mortgage application.

If they do accept a short settlement you would be doing well to have credit entry removed. May get it to show as satisifed but the default would still be there.

Good luck with it.