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  • FIRST POST
    • Matt5
    • By Matt5 14th Jun 17, 11:08 PM
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    Matt5
    First mortgage, want to make sure I do it right.
    • #1
    • 14th Jun 17, 11:08 PM
    First mortgage, want to make sure I do it right. 14th Jun 17 at 11:08 PM
    Hi all, my name's Matt, and myself and my partner (30 y/o) are currently looking at our first mortgage.

    We're looking at property locally to us around the 175k mark, we have a joint income of about 36k, and a deposit of 30k, which is a donation from my grandparents. Total spend on 'credit' is £150 per month, no more.

    My partner has a good clean credit file, I however have somewhat less so, with an Experian report figure of 651 (poor), 70 points off being 'Fair'.

    I have 2 defaults on my file dating back to June 2011, and July of the same year. One is settled, the other is not, but both will go over 6 years and should both be off my file by July of this year. I have other credit in my name which isn't much at just over 3k, but that's all being paid off nicely and up to date.

    I have a couple of questions, firstly, just how much is my low credit score likely to affect whether I get a mortgage or not, and is it worth holding off any applications till July?

    Secondly, come July when both defaults are removed from my file (or should be!) will my credit score suddenly jump up, or will it build up gradually?

    And thirdly, as the deposit is being gifted to me, is there anything specific I need to be aware of, regarding money laundering, and how lenders view gifted deposits?

    All advice greatly appreciated

    Matt.
Page 1
    • BFC123
    • By BFC123 15th Jun 17, 12:34 AM
    • 4 Posts
    • 1 Thanks
    BFC123
    • #2
    • 15th Jun 17, 12:34 AM
    • #2
    • 15th Jun 17, 12:34 AM
    Hi Matt . I'm no expert admittedly . From what I understand your score is irrelevant more what is on your file (the lender can't see your score) . When the defaults come off it will improve your file as I don't believe they will be visable to prospective lenders . Although I can't be certain as Iv no experience of it. However what I'm pretty certain of is that some lenders like to see that you have saved some of the deposit yourself - shows commitment . A lad I worked with got a higher rate due to the deposit being gifted . Have u tried typing mortgage intermediary and a lenders name into google ? It's surprising what you can find out about a prospective lenders lending criteria . . Or even speak with a none fee charging mortgage broker? Hope this helps buddy . Best of luck !
    • Lilla D
    • By Lilla D 15th Jun 17, 1:01 AM
    • 272 Posts
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    Lilla D
    • #3
    • 15th Jun 17, 1:01 AM
    • #3
    • 15th Jun 17, 1:01 AM
    Further to the above reply, as a fee charging broker myself and having heard many stories about fee free brokers, I would say that there is no free lunch. Besides, most brokers (myself included) don't charge for the initial checks and advice, so even if you choose a broker with a fee, chances are that you wouldn't pay a penny until a full application is submitted or an offer is issued.

    Re BFC123's advice about checking out lending criteria intended for brokers only - indeed these criteria sections can reveal a lot even to novice buyers, but they can also be pretty misleading or off-putting, if you don't fully understand the context and know where flexibility can be achieved by a broker. Proceed with caution, if trying to do a DIY job of checking criteria yourself.

    Anyway, it is true that most lenders ignore your score and do their own scoring, but they are interested in the details of the credit history. Re defaults, there's no universal answer - some will have no issues, some will do. Your credit commitments will influence the potential borrowing, so if you can eliminate the £3k and the £150 per month payment, might as well do it.

    A gifted deposit is not a problem as such and most lenders are quite happy with grandparents gifting the money. You'll just need a gift letter signed by her and some lenders may ask for a bank statement to prove that she has the money. You can have the £30k transferred to your account, but if it shows up on your bank statements as a recent transfer, the lender will want to know where it came from, so you'll be back to square one and will need a gift letter anyway.

    All in all, your situation doesn't sound too bad, but you'd definitely benefit from speaking to a broker, especially if you're a FTB. You'll have lots more questions coming up during the process and might as well have a broker to help you through the process.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • getmore4less
    • By getmore4less 15th Jun 17, 5:27 AM
    • 29,484 Posts
    • 17,621 Thanks
    getmore4less
    • #4
    • 15th Jun 17, 5:27 AM
    • #4
    • 15th Jun 17, 5:27 AM
    you should be working out what you think you can afford.


    Part of affordability is where does your money go.

    No saving, £3k of debt and £150pm on credit what ever that means.

    with a net income of £2300-£2500pm where does it all go.

    Got any money for the costs or will they eat into the £30k gift.

    if you can squeeze(and you should try as the rates get so much better over 90%) into LTV 85% you should be looking at short term rates around 2%
    over 25y £600-£650pm
    over 30y £500-£550pm
    over 35y £450-£500pm

    if swapping rent for mortgage are they in the same ball park

    Remember buying comes with new costs over renting will have the cash flow for those.

    Have a good look at your budget and work out what you can afford.


    Why do you still have a 6yo unsettled debt?
    who is that with because that could end up on lenders credit lists even if not on the main files.
    • Matt5
    • By Matt5 15th Jun 17, 7:03 AM
    • 3 Posts
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    Matt5
    • #5
    • 15th Jun 17, 7:03 AM
    • #5
    • 15th Jun 17, 7:03 AM
    Thanks for the replies guys, some food for thought there for sure.

    We are completely green to all this, a month or so ago we never dreamt of having a mortgage assuming it was out of reach with my poor credit. However that should be off my file next month, and our rent is due to go up in August, which after hearing about my grandmother made the very generous offer of giving us a substantial amount for a deposit so we could get in the property ladder.

    So far I've only made enquiries to Barclays who I have a current account with, and we have a telephone appointment with a mortgage advisor a week on Sunday, no further enquiries have been made to anyone yet.

    I'll try and quickly address some other points made from the replies...

    I actually have some savings of my own of around £3k, which isn't in a bank but squirrelled away at home (old school I know) my intention was to use this to contribute to the costs of fees and stamp duty etc, but I'm unsure now whether I'd be better using it to wipe off the £3k of debt I have outstanding and reduce my £150 per month in repaying it to £0. The credit I'm referring to is a hire purchase on a car.

    Regarding our finances, we both use separate current accounts with separate banks, we don't have or ever have overdrafts, and I own our only credit card which is paid off in full each month (current balance around £160 - I use it for fuel each month and pay in full to try and build a better credit file). We are on a relatively low income ofcourse with a joint of mid 30k, if you were to look at our statements you'd see a general pattern of money in on payday, and most of it gone by the end of the month, we've always been on top of it, but I guess the same is true of many people on our end of the scale income wise, I'm not sure if lenders take a dim view of it mind. What I will say though is we currently pay £595 pm on rent, the mortgages we've looked at would actually leave us around £80 pm better off.

    6yo unsettled debt was for an old phone contract disputed after I sent the phone back as it wasn't what I asked for, there was a dispute and I ended up cancelling the DD, the debt eventually got bought by a debt purchaser but I never paid it. It was messy but I was stupid back then. The amount was for about £650. The default should be gone next month.

    Matt
    • xyz123
    • By xyz123 15th Jun 17, 7:55 AM
    • 1,484 Posts
    • 366 Thanks
    xyz123
    • #6
    • 15th Jun 17, 7:55 AM
    • #6
    • 15th Jun 17, 7:55 AM
    Thanks for the replies guys, some food for thought there for sure.

    We are completely green to all this, a month or so ago we never dreamt of having a mortgage assuming it was out of reach with my poor credit. However that should be off my file next month, and our rent is due to go up in August, which after hearing about my grandmother made the very generous offer of giving us a substantial amount for a deposit so we could get in the property ladder.

    So far I've only made enquiries to Barclays who I have a current account with, and we have a telephone appointment with a mortgage advisor a week on Sunday, no further enquiries have been made to anyone yet.


    6yo unsettled debt was for an old phone contract disputed after I sent the phone back as it wasn't what I asked for, there was a dispute and I ended up cancelling the DD, the debt eventually got bought by a debt purchaser but I never paid it. It was messy but I was stupid back then. The amount was for about £650. The default should be gone next month.

    Matt
    Originally posted by Matt5
    Unless you are sure, be careful of mortgage appointments with ur bank. Ensure you fully understand that that appointment will itself be no guarantee of mortgage. It could be that you may get agreement in principle and then at detailed stage there are further questions and which may mean you r declined. I would say try to talk to experienced brokers and see what they say. As said often with good brokers for initial consultation there is no fee.

    Re the debt, I am by no means expert but if you never paid it, does it simply go away at 6 years ? It just seems strange that even if it's not paid it goes away. but as I said I don't know a lot about these credit ratings..
    • amnblog
    • By amnblog 15th Jun 17, 8:41 AM
    • 9,659 Posts
    • 3,724 Thanks
    amnblog
    • #7
    • 15th Jun 17, 8:41 AM
    • #7
    • 15th Jun 17, 8:41 AM
    Our OP has patchy credit, and is buying for the first time with a Partner using Grandparents cash.


    It strikes me that some proper one to one advice from an experienced professional is the way forward.


    Generally that does not come for 'free'.


    I can't remember the last time I got a good result by focusing on what is free - if I ever have.


    Our OP should get a recommendation to a good broker and be prepared to pay for some invaluable advice that will prevent tears later.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • Matt5
    • By Matt5 15th Jun 17, 9:12 PM
    • 3 Posts
    • 0 Thanks
    Matt5
    • #8
    • 15th Jun 17, 9:12 PM
    • #8
    • 15th Jun 17, 9:12 PM
    Our OP has patchy credit, and is buying for the first time with a Partner using Grandparents cash.


    It strikes me that some proper one to one advice from an experienced professional is the way forward.


    Generally that does not come for 'free'.


    I can't remember the last time I got a good result by focusing on what is free - if I ever have.


    Our OP should get a recommendation to a good broker and be prepared to pay for some invaluable advice that will prevent tears later.
    Originally posted by amnblog
    Great post, and a good summary of the feeling I'm getting from reading about this forum too.

    Truth is, I/we ARE new to this, and I'm reading terminology from other posters over the forum that is simply Greek to me, so I feel the next logical, and sensible step is to seek professional advise, advise I'm perfectly happy to pay for in the grand scheme of things.

    I've made an enquiry with a local independent broker with a decent rep for a face to face appointment, and we'll see where that goes. I'll update this thread accordingly.

    Huge, huge thanks for every input so far, this place is a God send!
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