Applying for a mortgage after a default drops off credit file

laserfocused01

HI, 

I know this has probably been asked before but I’d appreciate some advice. 

I have a satisfied default on my credit file which is due to drop off at the end of this month (hurrah). My credit scores are still low (I know they don’t really mean much) but hope they will improve once it’s removed.

Over the past year I’ve focused on rebuilding credit with a loan and a credit-building credit card with Tesco Bank. I’ve never missed a payment and my credit limit has recently increased. When I log in to credit references agencies they all say the same thing: you’re doing everything well but have one serious mark that’s holding you back. 

I moved home to my parents last year to finish saving a deposit and I’m around 10% now. I’m hoping to start looking at houses in the summer time.

My question is: once the default drops off, is summer realistic for applying for a mortgage or should I wait longer? I know lenders will no longer see the default, but still. 

I will speak to a mortgage broker closer to the time.

I guess I’m just nervous about undoing all the progress I’ve made. I’d hate to get an AIP and then be rejected at the final hurdle. 

Thanks very much. 

ACG

Once the default is over 3 years old, getting 90% LTV is easily possible (I have a couple with 10% and 6 defaults all 3-4 years old - its all been agreed, valuation came back last week, just waiting on the actual offer).

Dont worry, you will be fine.

laserfocused01

https://forums.moneysavingexpert.com/discussion/comment/81925147#Comment_81925147

That’s amazing, thank you! By the time summer is here, I should have saved enough to bring the LTV below 90% and have zero defaults (it’s been a long six years) so it’s a relief to realise I’ve been catasrophising this in my head.

Out of curiosity: are the interest rates in the situation you mentioned a lot higher than the standard? Understand if you are unable to comment.

Thanks again.

ACG

https://forums.moneysavingexpert.com/discussion/comment/81925201#Comment_81925201

In this case around 0.75% higher than the high street for 2 years. At which point it will be normal rates. It works out at around £2k more expensive over the 2 years.

Although as yours is 5 years old, satisfied and a 1 off, I would like to think you could get normal rates now.

Glad the comment helped. I think it is quite important as you can hear all doom and gloom on the internet but you would be amazed at what can be done. If you had been bankrupt and discharged for 5 years, you would be open to normal rates! So a 1 off default should be fine.

laserfocused01

https://forums.moneysavingexpert.com/discussion/comment/81925317#Comment_81925317

Appreciate your help. 😊