Late Payment Or Default Best For Mortgage?

ate90

Hello,

I was hoping for some help/advice as I prepare to make a mortgage application next year.

I currently have a default on my credit report from March 2012 for £487, this has not been settled yet, the lender has offered to remove the default and replace with a late payment mark 3 upon settling the balance. The default is obviously 4 years old and due to fall of in march 18, if I make the payment the late payment mark 3 will be placed on the account from say today and run for a further 6 years.

My question is if i was to apply for a mortgage in 12 months time what option would give me the better chance?

Any help/advice is much appreciated. Please feel free to ask any further questions necessary.

Adam

kingstreet

A default is normally worse, but as it's over three years old you would have high street options now.

If you do something which makes a lesser "offence" look sooner, you might shoot yourself in the foot and lose the options you have now.

ate90

Do you suggest making the payment and settling the account, however not changing the status of the default, or is it best leaving it with a balance and just waiting for it to 'fall off'?

You have part answered another doubt in my mind as to whether I could look at high street lenders with a default over 3 years old, in your experience what is the success rate of such applications?

Many Thanks,

Adam

kingstreet

I'm not going to speculate on a case where I have one piece of data.

Get your credit files to an independent broker and get a route map done for when you intend to buy.

ate90

Will do. Any broker or one who specialises in adverse credit?

kingstreet

Many of us do anything we get through the door, while others specialise.

Speak to the brokers you find and get a feel for them.

If they start talking massive fees and obscure lenders, they may be going OTT. This is not a massive adverse issue and as suggested, there should be a high street solution if played correctly.

cahillg81

From an underwriting perspective I'd be much happier seeing the default settled and kept at default.

Also depends on what the default is for, such things as mobile phones aren't treated as seriously as a personal loan/credit card.

Thrugelmir

While the default will be removed. The account will remain to be shown in default. Default is not itself a one off event.

ate90

Sorry Thrugelmir, not quite sure what you mean.

Cahillg81 - Will clearing the balance now not cause the default to remain on my report for a further 6 years from the date of settlement?

Thrugelmir

ate90 wrote: »

Sorry Thrugelmir, not quite sure what you mean.

Simply put, accounts which are not paid in accordance with contractual terms are marked as such every month on CRA files. Whether a formal default notice has been is irrelevant. A default is not a singular one off event. Lenders will want to see how long it is before the account position is normalised, i.e. no arrears and payments on time.