A default is one of the most common credit issues people worry will block a mortgage application, and it is also one of the most misunderstood. Unlike a County Court Judgment, no court is involved: a default is simply a lender or creditor formally marking that you fell behind on payments. What matters to a mortgage lender is not that a default exists, but its detail: what it was for, how much it was, when it happened, whether it is settled, and how much deposit you have.
Key takeaway: A default on its own rarely rules you out of a mortgage. Lenders weigh five things together: the type of default, its value, how long ago it was registered, whether it has been satisfied, and your loan to value. Change any one of those and the answer can change completely.
[[stats: Specialist lenders = Where the high street says no | 6 Years = How long a default stays on record | £300 = Threshold many lenders ignore below | 90+ = Lenders searched | Free = Initial consultation | National = Coverage across the UK]]
What a default actually is
A default is recorded when a creditor, such as a bank, credit card provider, mobile phone network or utility company, formally registers on your credit file that you have significantly fallen behind on payments and are unlikely to bring the account up to date. It is a decision made by the creditor directly, unlike a CCJ, which requires a court order.
A default is recorded against a specific "date of default", and it remains on your credit file for six years from that date, regardless of when you eventually pay it off. This is an important difference from a CCJ: there is no equivalent one month window to have a default removed entirely. Paying it changes its status from unsatisfied to satisfied, but the six year clock keeps running from the original date.
The threshold most people do not know about
This is the single most useful thing on this page if you have one or two small defaults.
Many specialist and near-prime lenders will disregard small defaults entirely, particularly where they relate to utilities, mobile phone contracts or mail order accounts, and particularly where the value is low. Pepper Money, for example, will ignore up to two individual defaults of £200 or less on several of its products where they relate to utility, communications or mail order providers. Aldermore and Bluestone apply a similar principle, disregarding combined CCJs and defaults below £300 per application.
In practice, this means a handful of small, old phone or utility defaults that feel significant to you may not register as a problem to a lender at all. It is genuinely worth checking your file rather than assuming every default counts equally.
What lenders actually look at
There is no single rule. Lenders assess defaults across five dimensions at once, and it is the combination that decides the outcome rather than any one factor.
[[table: What lenders assess | Why it matters ;; The type of default | A missed mobile phone bill is treated very differently to a mortgage or loan default ;; The value of the default | Many lenders disregard low-value defaults entirely, particularly with smaller specialist providers ;; How long ago it was registered | The older the default, the less weight it carries. Options widen considerably as it ages ;; Whether it is satisfied | An unsatisfied default is a live debt. A satisfied one is a historic problem. This is often the single biggest factor ;; Your loan to value | The larger your deposit, the more risk a lender can absorb. Deposit size frequently decides borderline cases]]
The interaction is what catches people out. A £150 phone default, satisfied two years ago, with a 20% deposit is likely to be a non-issue for most specialist lenders and even some high street ones. A £4,000 loan default, unsatisfied, with a 5% deposit is a considerably more specialist case. Same type of credit issue, completely different market.
Satisfied versus unsatisfied
An unsatisfied default tells a lender you owe money right now and have not paid it. That is treated as a live concern and narrows your options, particularly on the high street, but it does not shut the door completely: several specialist lenders will still consider an application with an unsatisfied default, depending on its value, age and your deposit.
A satisfied default tells a different story. It says something went wrong at the time, and it has since been resolved. Many lenders that decline outright on an unsatisfied default will consider a satisfied one, and the terms available improve as time passes since the date it was settled.
Whether or not it is paid, the default itself stays on your credit file for six years from the original registration date. Paying it does not remove that record, but it does change how a lender is likely to view it.
How your deposit changes the answer
Deposit size does more work on an adverse credit case than almost anything else.
Lenders price risk. A credit issue increases perceived risk, and a larger deposit offsets it, because the lender has more equity protecting them if things go wrong. That is why the same default history can be acceptable at 75% loan to value and declined at 95%.
In practical terms, if you have a default and are close to a deposit threshold, finding a little more can widen your options more than waiting another six months. It is worth doing that maths before you apply rather than after a decline.
A real example: how the timeline plays out
Specialist lenders often build recency directly into their product range rather than deciding it case by case. Pepper Money's residential range is a useful illustration of how this translates into real lending decisions for a recent, unsatisfied default.
Pepper Money's general position is that it will consider an application where no unsatisfied default has been registered in the last six months, and will look at earlier applications on a case by case basis where a default was registered more than six months before the point of mortgage offer. On top of that general rule, several of its products carry their own allowance for small, disregarded defaults.
[[table: Pepper Money product | Default allowance ;; Pepper 6, 12, 18 and 24 | Up to 2 individual defaults of £200 or less ignored per application, where they relate to utility, communications or mail order providers ;; Pepper 36 | Up to 1 individual default of £200 or less ignored per application, on the same basis ;; All products | No unsatisfied default registered in the last 6 months, subject to case by case review beyond that point]]
Key lender criteria for defaults, compared
Pepper Money is not the only specialist or near-prime lender with published default criteria. Tap any card below for a closer look at how each one assesses a default.
[[casestudies: Pepper Money|Small utility and comms defaults are disregarded on most tiers|Pepper Money will ignore up to two individual defaults of £200 or less per application on its Pepper 6, Pepper 12, Pepper 18 and Pepper 24 products, and one such default on Pepper 36, where they relate to utility, communications or mail order providers. Beyond that, its general position is no unsatisfied default registered in the last six months, with applications outside that window considered on a case by case basis at the point of mortgage offer. ;; The Mortgage Lender|Four risk levels, with the same tiering used for CCJs and defaults|The Mortgage Lender assesses defaults across the same four risk levels it uses for CCJs. Its cleanest tiers, RL0 and RL1, require no defaults registered in the last 36 months, with maximum LTV of 95% and 90% respectively. RL2 and RL3 allow a small number of defaults within that window provided none are recent, up to 85% and 80% LTV. Defaults and CCJs under £300 are disregarded across the range. ;; Aldermore|Five levels, up to 98% LTV on the cleanest tier|Aldermore uses five lending levels for defaults, the same structure it applies to CCJs. Level 1 allows no defaults in the last 36 months, up to 98% loan to value. Level 2 allows one default in 36 months provided none in the last 6 months, up to 95% LTV. Level 3 allows two defaults on the same 6 month rule, also up to 95% LTV. Level 4 allows up to four defaults in 36 months, including one in the last 6 months, up to 90% LTV. Combined CCJs and defaults under £300 are ignored per application. ;; Precise Mortgages|Five tiers, with a distinct value cap on recent defaults|Precise groups default applications into five tiers. Tiers 1 and 2, its cleanest bands, require no defaults registered in the last 24 months. Tiers 3 and 4 allow up to two defaults in 24 months, provided the combined value is no more than £1,500 in the last 12 months, with no cap thereafter. Tier 5 allows up to five defaults in 24 months for more complex cases. Defaults registered in the 3 months immediately before application are not accepted on any tier. ;; Bluestone|Five credit tiers, with small and telecoms defaults largely ignored|Bluestone assesses defaults across five credit tiers. Its Clear tier requires any default to be satisfied, up to 85% LTV. The AAA tier allows one default of any status in the last 36 months, up to 80% LTV, and the AA tier allows two on the same basis, also up to 80% LTV. The A tier allows three defaults in 36 months up to 75% LTV, and its BBB tier allows up to four, up to 70% LTV. Defaults under £300, or from telecoms providers, are ignored regardless of recency, and anything older than 36 months is disregarded entirely. ;; Vida Homeloans|Four tiers by recency, assessed alongside secured and unsecured arrears|Vida Homeloans assesses unsecured arrears of £250 or more within the last six months across its four residential tiers. Vida36 accepts one such item in six months, Vida24 accepts two, and Vida6 accepts three, all with up to 85% loan to value. Its Packager tier, reached only through selected mortgage clubs, does not cap the number considered, up to 75% LTV. Secured arrears are not accepted within the last six months on any tier, with older secured arrears assessed against each tier's own recency window.]]
Good to know: This is a snapshot of published criteria from six specialist and near-prime lenders, not an exhaustive market view, and ranges like these change regularly. A mortgage broker at Quanstrom Financial can check current criteria across the whole market, including lenders not listed here, against your specific situation.
High street or near-prime lenders may accept if a default is genuinely minor, or if a more serious one happened a long time ago and has since been resolved. Criteria like this tend to sit outside standard published tables and are assessed case by case, which is exactly the kind of detail a mortgage broker at Quanstrom Financial can check on your behalf before you apply anywhere.
Check your credit file before you apply
A surprising number of people find out about an old default during a mortgage application, which is the worst possible moment.
You can check your credit file for free or at low cost through Experian, Equifax or TransUnion, or through a service such as Checkmyfile that combines all three. Doing that before you apply means no surprises, and it gives you the chance to query anything that looks wrong or out of date. Our guide to credit scoring explains what lenders see and how to check.
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What to do if you have a default and want a mortgage
- Check your credit file so you know the exact amount, date and status of every default rather than working from memory.
- Work out whether it is likely to be ignored. Small, low-value defaults with utility, communications or mail order providers are disregarded by several lenders, so it may matter less than you think.
- Understand your deposit position. Getting to a better loan to value band may open more doors than waiting for the default to age further.
- Do not apply speculatively. Each application leaves a footprint, and a decline on an adverse credit case makes the next one harder.
- Get advice before applying, not after. This is exactly the situation where knowing which lender to approach first matters most.
Whichever East Sussex town you are buying or remortgaging in, a mortgage broker at Quanstrom Financial can search the whole market on your behalf, including the specialist adverse credit lenders that most high street banks and comparison sites will not show you.
Where this fits with other credit issues
A default is one of several things that can affect a mortgage application, alongside CCJs, missed payments, IVAs and bankruptcy. They are assessed differently from each other, and having more than one changes the picture again.
Our complete guide to adverse credit mortgages covers the wider landscape, including real client examples and how different credit events compare, and if a County Court Judgment is part of your situation too, our dedicated CCJ mortgage guide explains what lenders look at there specifically.
One thing worth repeating from that wider guide: people routinely overestimate how serious their credit history looks to a lender. Several small, old, settled defaults can be far more acceptable than clients expect, sometimes even to a high street lender. It is genuinely worth asking rather than assuming.
Frequently asked questions
Will I pay a higher rate forever?
Hopefully not. A mortgage broker at Quanstrom Financial can work with you to identify what changes could help you move onto a high street mortgage in the next two to five years. This is not guaranteed, but there are practical steps that can help you work towards that goal.
Can I get a mortgage with a default?
In most cases yes. A default narrows your options rather than removing them. The type of default, its value, its age, whether it is satisfied and your deposit size all affect which lenders will consider you and on what terms.
How long does a default stay on my credit file?
Six years from the date the default was registered, regardless of when it is paid off. After that it drops off entirely and most lenders will treat you as having no default.
Will a small default stop me getting a mortgage?
Often not. Many specialist and near-prime lenders disregard small defaults entirely, particularly low-value ones with utility, mobile phone or mail order providers. It is worth checking your file rather than assuming a small default rules anything out.
Is a satisfied default better than an unsatisfied one?
Considerably. An unsatisfied default is treated as a live unpaid debt, and many lenders will not proceed while one is outstanding. A satisfied default opens up options, and those options improve further as time passes since it was settled.
Does the amount of the default matter?
Yes. A small default is viewed very differently to a large one, and several lenders disregard low-value defaults entirely, particularly with smaller providers. The value is one of the first things a lender will look at.
Will I need a bigger deposit with a default?
Often, though not always. Deposit size is one of the main ways a lender offsets credit risk, so a larger deposit widens your choice of lenders and can improve the rate available. Where you are close to a threshold, finding a little more can make a real difference.
What is the difference between a default and a CCJ?
A default is registered directly by a creditor when you fall behind on payments, with no court involved. A CCJ is a court order, usually issued after a creditor has taken legal action over an unpaid debt. Lenders assess the two differently, and having both changes the picture again. See our CCJ mortgage guide for how that specific issue is assessed.
Should I wait for the default to drop off before applying?
It depends how close you are. If it is a few months from its sixth anniversary, waiting may be worth it. If it is years away, waiting achieves little compared with building your deposit and getting advice sooner. It is worth taking advice rather than guessing.
Can I get a mortgage with more than one default?
It is harder but frequently still possible, particularly where the defaults are small, old and satisfied. Multiple recent or unsatisfied defaults narrow the market considerably, and this is where specialist lenders and proper advice matter most.
Do you help with mortgages for clients with defaults across Eastbourne and East Sussex?
Yes. Quanstrom Financial is a whole-of-market mortgage broker based in Eastbourne, and we regularly help clients with defaults from Eastbourne, Brighton, Hastings, Lewes, Bexhill, Seaford, Uckfield, Hailsham and the wider East Sussex area. Being whole-of-market means access to specialist adverse credit lenders that are not available directly on the high street.
Written by Toby Quanstrom CeMAP, Director at Quanstrom Financial, a whole-of-market mortgage broker based in Eastbourne, East Sussex, specialising in mortgages for clients with adverse credit.
This article is general information only and does not constitute personal advice. Lender criteria vary considerably and change regularly, and whether a mortgage is available depends on your individual circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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