Can You Get a Mortgage if you Have Defaulted in the Past?
If you have defaulted on a payment in the past, then you may be concerned as to whether or not you can get a mortgage. At the end of the day, if you have defaulted, then your mortgage chances will take a hit. How much they take a hit by, will largely depend on how much of a deposit you have. There are two different types of borrowing, one of them being secured, and one of them being unsecured. A secured loan may be taken out against your car, or a mortgage. Unsecured may be a phone bill or a credit card. If you have a missed payment on an unsecured loan, then this is far less serious than a secured loan. If you have one or two late payments against a debt that is unsecured in the last six years, you shouldn’t need to worry too much about your mortgage being impacted.
First-Time Buyers and Missed Payments
If you are a first-time buyer, then you may be expected to put down a far bigger deposit, if you have defaulted more than the example above. You may also be asked to pay a higher interest rate on your mortgage too. If you have a small deposit and are looking at a mortgage with a 95% ratio, then you may struggle to secure this rate. Lenders are taking a risk by lending you so much of the property value, and if the house price should drop, you’ll soon find that it is very easy to fall into negative equity.
Have you Missed a Payment in the Last Year?
If your payment is recent, your lender may judge you more harshly. Every lender will have their own distinctive set of rules when it comes to missed payments. Generally speaking, late payments for utilities are not serious, but there are ones that are seen as red flags. This could include missing a payment on your mortgage. If you have satisfied your default, then you will find it much easier to get the mortgage you are looking for, and you may even find that you can get a more competitive rate too. If you have an unsatisfied default, this will work against you. Your lender may also grade your application according to your risk, and the category you fall into will ultimately decide the rate that you are eligible for. Having a satisfied default could easily boost your credit rating, so it is a good idea for you to try and get this done before you go ahead and apply for your mortgage.
Source – Onlinemortgageadvisor
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