Bad Credit • Right to Buy
Defaults on your credit file don’t automatically rule out a Right to Buy (RTB) mortgage. Specialist lenders will sometimes look past defaults — especially when they’re older, smaller, or your overall profile is strong and your RTB discount provides solid equity.
Key takeaways
- Older, smaller, or satisfied defaults are easier to place than recent/large ones.
- Your RTB discount often counts as equity (your “deposit”), reducing lender risk.
- Clean conduct since the default and strong affordability materially improve approval odds.
What Is a Default?
- A default is registered when an account has been unpaid for an extended period (often 3–6 months) and is closed by the lender.
- It remains on your credit report for six years, even if paid off.
- Impact varies by recency, size, number of defaults, and your overall financial track record.
Can You Get a Right to Buy Mortgage with Defaults?
- Yes — with the right lender. High street banks rarely accept recent defaults; specialists may.
- Smaller/older defaults and those marked “satisfied” are viewed more positively.
- Strong income and affordability help offset risk.
- Your RTB discount can act as the full deposit in many cases.
Key Factors Lenders Assess
| Factor | What Lenders Usually Look For |
|---|---|
| Recency of Default | Older (1–3+ years) is better; some will consider within 6–12 months if small. |
| Size of Default | Smaller balances are easier to work with; large unpaid debts are harder. |
| Number of Defaults | One or two small defaults is easier than multiple large defaults. |
| Other Credit Behaviour | Clean conduct since the default and no new issues. |
| Right to Buy Discount | Discount used as equity can offset risk and improve terms. |
| Income / Affordability | Stable income and spending patterns to pass affordability checks. |
Case Studies
Scenario A – Recent Small Default
Emma had a £400 mobile bill default 10 months ago. With a 35% RTB discount and steady income, a specialist lender approved her despite the recent default.
Scenario B – Older Multiple Defaults
Sam had two unsecured loan defaults totalling £3,000 from 4 years ago. Clean conduct since and a strong RTB discount helped him secure a mortgage, though on a higher rate.
Practical Steps if You Have Defaults
- Check your credit reports — confirm the default dates and amounts are correct.
- Settle or reduce outstanding balances where possible; a satisfied default is viewed more favourably.
- Avoid any new credit issues — keep payments current.
- Gather documents (income, bank statements, RTB offer letter) to evidence affordability.
- Use a specialist broker — many default‑friendly lenders are broker-only.
Check all three credit files in one place
Use our partner link to view your data across agencies. This won’t harm your score.
FAQs – Right to Buy with Defaults
Do my defaults need to be settled before applying?
Not always. Some lenders accept unsettled defaults depending on age and size — but settled helps.
Will a default from 6 months ago stop me?
It makes approval harder, but a few lenders may consider small, recent defaults if everything else is strong.
Does the RTB discount count as deposit/equity?
Often yes — it reduces what you need to borrow and lowers lender risk.
How many defaults is too many?
There’s no fixed rule. Fewer/smaller defaults are much easier to place than multiple large ones.
Can I still apply with multiple defaults?
Yes — especially if they’re older, your conduct has been clean since, and your RTB discount provides good equity.
