Yes, you can get a mortgage with a new default. However, if you miss a series of mortgage payments or don’t pay over several months, you may be sent a default notice from the credit facility.
To a large extent, it will affect your mortgage application. However, with the right expertise and guidance, there is a possibility that you can get a mortgage. To learn more about mortgage default, read this article.
What is a Mortgage default?
A mortgage default occurs when a mortgagee fails to pay on time or cannot pay in full to the same creditor. If this happens, your account with the creditor may be closed, and you can’t access their credit facilities anymore. Also, to add salt to the wound, a credit report will be placed on your account.
You will be sent a default letter if the debt is regulated by the Consumer Credit Act. However, the default letter will be sent to you after several defaults, and it is also a legal requirement. But it doesn’t mean that legal action against you has started.
How long will a default notice stay on my credit record?
Usually, a default remains on a defaulter’s credit file for six years from the day it was registered. Sometimes, the debt may be sold out to a collection company that will also file a credit default at the point where they take over the debt. Therefore, whenever the default shows twice, it means that the debt has been sold to another debt collection agency. Usually, when you satisfy the first default, it will be marked as “satisfied.” Nevertheless, the date the default will expire will not change; it will remain on your credit report for six years.
Steps to avoid mortgage default
There are several ways to avoid mortgage default. The damage a mortgage default does to your mortgage is more than you can imagine. However, do the following to avoid a mortgage default:
Pay on time
You need to ensure that your mortgage is paid on time, or it may result in a default. In addition, you can save up in bits so that the bill will not be too heavy when payment time draws near. To make sure that you don’t forget or overlook this vital payment it is wise to set up a direct debit from your bank account.
Never borrow more than you need
Borrowing more than you need can be tempting, especially if the credit company is willing to give more. Confine your borrowing limit to what you need, not what you want.
Pay property taxes and Home Insurance
You need to pay your property taxes on time and your home insurance. Delaying payments will also affect your credit score. More so, it could cause a mortgage default because it’s one of the conditions you must fulfill.
Conclusion
You can consult a mortgage expert to get more advice about how to handle a default. Don’t forget, even with a mortgage default, you may still be able to access credit facilities, but you have to search thoroughly. Specialist advisers like MortgageKey may be able to provide assistance on issues regarding a mortgage with defaults.