Default on credit file - mortgage application

BaldNeil

Hi

Please read this as I am really stressing and need some advice!

I had a text today saying I owed Anglian water £150 from over a year ago. I immediately phoned them and paid but they said a default notice had been put on my credit file.
The debt arose because I moved into a rented flat as my then wife and I were in the process of divorcing. Sadly on March 29th 2021 she passed away, so I instantly vacated the flat and moved back into the family home to look after our two teenage boys. I thought I had sorted everything from the flat but in my haste to leave I overlooked the water bill. I know that it was totally down to me and wasn't set up on a DD. Apparently letters (they admit no emails were sent) were being sent to the flat, and the landlord despite knowing my situation didn't forward them on. (Not her responsibility - I know) - hence the unpaid debt.

I have checked my credit file and it has adversely affected it.

My question is this - I am looking to buy a house shortly and have I really messed up my chances of getting a decent mortgage?
My current situation is:
I have a house now with no mortgage (this will be my deposit) £400k ish
I have 2 credit cards with a combined facility of £23k BUT there is no balance and hasn't been for 6 years.
I earn over £50k 
This is the first adverse thing on my credit report ever ( I am 47 years old)
I have no loans or anything else that is adverse on my file - just the bloody £150 that is now paid!!!

Do mortgage lenders actually look at the credit file or is it just an algorithm and 'computer says no'?

Thanks for reading and any comfort anyone could offer would be great as I am totally stressed out about this.

BaldNeil

[Deleted User]

They use algorithms, based on looking at your credit files.  They are some smaller, specialist lenders who take a more manual approach.

A settled default doesn't have to be a deal breaker. Post on the mortgages boards for more detailed advice.

martinbainbridge1975

There are plenty of mitigating circumstances there reading your post, I would consider a phone call to the water company and ask if they would remove the default as a gesture of good will given the circumstances of how it arose in the first place, especially as it is settled.  I have learned that if you dont ask you dont get

Regarding your mortgage there a lots of factors taking into account, there is plenty in your favour with deposit amount,  earnings and your previous credit file, 1 default is a blip if the rest is clean.

If your loan to value of house to mortgage is low it may not be a huge issue, 2 things i would say is 1 don;t worry and 2 talk to the professionals for advice 

I am CEMAP mortgage qualified but no longer in the industry - talking to a broker may be a suggestion

sourcrates

Maybe a silly question, but if you already have a 400k mortgage free house, why the need to move, on a banks terms, and take on more debt ?