Mortgage With Defaults: The Broker Who Read My Accounts
She said my defaults were the easy half
This is a composite of conversations we have most weeks, written up as one story. Details have been changed. It is a personal account, not mortgage or tax advice.
The short version. I’m a self employed builder with two satisfied defaults from 2023 and nineteen years of trading behind me. A national broker declined me over the phone in four minutes without ever seeing my accounts. A local broker in Benfleet asked for two years of accounts, both SA302s, the exact dates of the defaults, a written explanation of what happened in 2023, and my accountant’s phone number. Then she told me the defaults were the easy half of the problem and that my accounts were the bit we needed to talk about, which was not the order I’d have put them in. She would not promise me a mortgage. She told me exactly what a yes would need.
The folder sat on the passenger seat of the van from Tuesday to Friday.
Two years of accounts, both SA302s, my credit report printed out because I don’t trust reading anything important on a phone.
I don’t really know what I was waiting for.
I think I’d decided that if a local broker told me no as well, that was that. And I’d rather not know than know.
Anyway. Friday, ten past twelve, sat in a lay-by eating a sandwich.
I rang her.
She asked me what happened
Not what my salary was.
I want to make more of that than it probably deserves, but it was the first question anybody had asked me in a month that I could actually answer.
So I told her. The commercial job, the client going under, the fourteen grand, the three lads, the merchant account, the credit card and the loan I let go instead.
She didn’t interrupt and she didn’t make a noise when I said the word defaults.
Then she asked how old they were, whether they’d been satisfied, and what the balances had been.
Then she asked how long I’d been trading.
Nineteen years, I said.
And she said: right, so you’ve got a nineteen year old business and two administrative marks from one bad client. Those are not the same size of problem, and I don’t think you’ve been treating them like it.
“Your defaults are the easy half of this”
Here’s what she actually said, and I’ve thought about it a lot since:
“Your defaults are the easy half of this. Two of them, three years old, both satisfied, with a proper reason behind them. I can work with that. The bit we need to talk about is your accounts.”
Which was not the order I’d have put those in a fortnight ago.
I’d spent three years thinking of myself as a man with bad credit.
She spent about nine minutes on my credit file and the rest of the hour on my income.
Can you get a mortgage with defaults? What she actually said
She was careful here, and I appreciated it, because everything else I’d read that month had been either “guaranteed approval” or “give up”.
What she said was that with defaults, the questions a lender asks are: how old are they, how many are there, have they been satisfied, how big were they, and what was the reason. And that mine answered well on nearly all of those.
She said there are lenders who care much more about the last two years of conduct than they do about 2023.
She also said some of them would likely want a bigger deposit from me than from somebody with a clean file, and that she’d put the numbers in front of me before I decided anything.
Then she said the thing about my accounts again, because I clearly hadn’t taken it in the first time.
What she asked for that the call centre didn’t
In order:
Two years of accounts, and both SA302s. She said some lenders will work from one year but two gives more options, and that she wanted to see the shape of the business rather than one number off a form.
The exact default dates from my credit file. Not roughly. The actual registration dates, because how old they are matters more than the fact they exist, and because it changes when certain lenders come into play.
A written explanation of 2023. Not a sob story, her words. Dates, the client, the amount outstanding, what I chose to do and why. She said an underwriter reading that next to two satisfied defaults sees something completely different to an underwriter who just sees two defaults and no context.
My accountant’s phone number.
That last one stopped me.
She wanted the three of us on a call, so that the accounts, the tax position and the mortgage could be discussed in the same conversation rather than three separate ones that never meet.
Nineteen years self employed. Nobody has ever suggested that to me. Not once.
The bit about my accounts that I didn’t want to hear
I’d worked out on my Sunday that my declared profit was the real obstacle, and I was half hoping she’d tell me I’d got that wrong.
She didn’t. She said I’d got it right.
She was clear that nothing about how my accountant has handled it is improper. It’s correct, it’s legal, and it has saved me money. It just optimises for a tax bill rather than for a mortgage application, and nobody had ever asked me which of those two I wanted this year.
She also said, and this is the bit I’d have paid for on its own, that the answer is not to go away and quietly pay myself less in order to save a bigger deposit. That was my plan. It would have done nothing to the figure a lender looks at and made this year harder for no reason.
So the plan is a conversation with my accountant, with her on the call, about how this year gets structured and what it means for both the tax and the borrowing. Properly, in advance, with both sets of consequences on the table.
What she wouldn’t do
She wouldn’t tell me I’d get a mortgage.
I asked. Twice, in slightly different words, because after a month of this I badly wanted one person to just say it out loud.
She said she wasn’t going to promise me an outcome on a first phone call, but she’d tell me exactly what a yes needs and then I could decide whether I wanted to do it.
She also said that if she couldn’t help me this year, she’d tell me what to change so she could help me next year.
Which is a strange thing to say when you’re trying to win somebody’s business, and it’s the reason I believed the rest of it.
Where I am now
Officially, nowhere.
I have not been approved. Nothing has been agreed. There’s a real chance the numbers don’t work this year and we rent on Canvey for another twelve months.
But I know what the actual problem is, which I didn’t three weeks ago. I know it isn’t really the defaults. I know the thing holding me up is a structural decision about my own business rather than a black mark I have to sit out until 2029.
And I know there’s a plan, with a timescale, and a person doing it who has read my accounts.
Four minutes with the first lot.
An hour and ten with her, and she was twenty minutes up the road the whole time.
Part one: Four minutes and eleven seconds to decide about a house Part two: How long does a default stay on your credit file?
What people ask before they ring
Can you get a mortgage with defaults on your credit file? Often, yes. The questions that decide it are how old the defaults are, how many there are, whether they have been satisfied, how large the balances were, and whether the reason behind them can be explained. Two satisfied defaults from three years ago sit at the more workable end of adverse credit.
Do I need to wait until my defaults drop off? No. Defaults stay on a credit file for six years from registration, but plenty of lenders will consider an application well before then. Waiting can be the right decision, but it should be based on what is actually on your file rather than an assumption.
Can a sole trader get a mortgage with bad credit? Yes, though it needs both halves handled together. Lenders assess a sole trader on net profit evidenced by accounts and SA302s, so the income side often needs as much attention as the credit side. A process that only asks for a salary will usually fail before it reaches your credit file at all.
How many years of accounts do lenders want? Most want two years. Some will consider one year of accounts, which can matter if a recent year is stronger than an older one.
Will a broker’s first conversation put a search on my credit file? An initial discussion about your circumstances does not. A formal application does, which is why establishing the right lender first matters when your file already has adverse credit on it.
What should I bring to a first call? Your credit report, two years of accounts and SA302s if you are self employed, and a short written note of what happened and when. Turning up with those saves a fortnight.
If a form turned you down without anybody reading your accounts, that was not a verdict. Angela Little is a specialist bad credit mortgage broker in Benfleet, Essex, experienced in mortgages with defaults and self employed and director income. Free quote, no obligation, no pressure to proceed. Start your journey, or ring 01268 387898 and tell her what happened.