Client
A couple in their mid-30s, both employed full-time, with childcare costs and a 10% deposit saved. They had rented for years. Their credit history was the thing holding them back, and they knew it.
Objective
To secure their first mortgage after earlier financial difficulty had left several marks on their credit files.
Situation
Their own bank had already declined them before they came to us. That is worth stating plainly, because a first decline is where most people stop.
Their credit files showed two things: a default from roughly three years earlier, since satisfied, and a run of late and missed payments dating from a period when their circumstances changed suddenly. Neither was disputed. Both were disclosed to us upfront, and their finances had been stable since.
The problem was not the history itself. It was that no lender they had approached would price for it.
Challenges
- A recorded default and a series of late and missed payments
- High-street lenders declining the application outright
- Affordability reduced by childcare costs
- The emotional impact of feeling shut out of the mortgage market
What We Did
We started by explaining how lenders actually treat older credit issues, and specifically how differently a satisfied default from three years ago reads compared with a live one.
Each marker on the file was reviewed individually against specialist lending criteria to establish which ones would sit inside a lender’s tolerance and which would not. That work determines the lender shortlist. Getting it wrong means another decline and another hard search.
We then drafted a written explanation for the underwriter covering what happened, the circumstances behind it, and what had changed since. Cases involving bad credit mortgages are frequently decided on how well that context is presented rather than on the entries alone. From there the case went to a lender that underwrites on individual merit.
Solution
The couple were approved for a £245,000 first time buyer mortgage with their 10% deposit accepted.
Outcome
Monthly payments came in inside the budget the clients had set at the outset. Application to completion took just over eight weeks.
Conclusion
Historic credit problems reduce the number of lenders available. They do not, on their own, make a purchase impossible. The determining factors here were the age of the default, the fact it had been satisfied, and a lender prepared to read the file in context.
Frequently Asked Questions
Can you get a first time buyer mortgage with a default on your credit file?
Yes, a default does not automatically prevent a first time buyer mortgage. Specialist lenders assess how old the default is, whether it has been satisfied, and how the borrower has managed credit since. A default from three or more years ago that has been settled is viewed very differently from a recent unsatisfied one.
Does a mortgage decline from your bank show on your credit file?
A decline is not recorded on your file, but the hard credit search behind it is. Several searches close together will make later applications more difficult, which is why the second application should be placed with a lender likely to accept it.
How much deposit do you need for a first time buyer mortgage with adverse credit?
Most specialist lenders want at least 10% where credit issues are historic and settled. More recent or unsatisfied adverse credit usually pushes the requirement to 15% or higher. The stronger the deposit, the wider the lender choice and the better the rate.
Do childcare costs reduce how much you can borrow?
Yes, committed childcare costs are treated as an ongoing expense in the affordability assessment. Declaring them accurately at the start prevents the application failing at underwriting, which is where understated outgoings usually surface.
Final Thoughts
Adverse credit narrows the lender pool rather than closing it. What separates a decline from an offer is usually lender selection and how the file is presented, not the credit history itself.
UK Mortgage Broker is a whole-of-market broker, directly authorised and regulated by the Financial Conduct Authority. Circumstances vary and this outcome is specific to these clients. It is not an indication of terms available to others. Your home may be repossessed if you do not keep up repayments on your mortgage.
Call 01628 969 500 or email info@uk-mortgagebroker.co.uk to speak with a qualified adviser.
Related Pages
- Bad Credit Mortgages UK – How defaults, CCJs and missed payments affect lender choice, and what specialist lenders will accept.
- First Time Buyer Mortgage – Deposit requirements, affordability and the application process for buying a first home.
- Can I Get a Mortgage – The main criteria lenders assess before approving an application.
- How Your Credit Score Affects Your Mortgage Application – What lenders see on your credit file and how much weight they give it.
- Mortgage Rates UK – Current rate ranges by deposit size and borrower profile.