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  • FIRST POST
    • Smurf86
    • By Smurf86 14th Feb 18, 3:56 PM
    • 6Posts
    • 1Thanks
    Smurf86
    Poor Credit Mortgage Application
    • #1
    • 14th Feb 18, 3:56 PM
    Poor Credit Mortgage Application 14th Feb 18 at 3:56 PM
    Hi Guys,

    I am looking for some advice please. I am looking to purchase a new build property with my partner, within the next year or so. The development site will be finishing completion of all houses next year (2019) so the latest we will be able to purchase will be early 2019.

    My partner is employed earning £22,000. I am recently self-employed earning approx. £30,000. When we look to buy I will have 3 years worth of accounts and I am aware that a variety of mortgage companies will be happy to base my income on the average of the last two years.

    The house prices we are looking at are between £250-260k. We are looking to use the Help To Buy scheme which will account for 20% of the house price and we pay the 5% deposit which we will have in savings. The mortgage needed after Help to Buy and deposit would be £187,500 for example on a £250k home. Our incomes should cover this easily enough on a x4.5 multiplier.

    I currently have no credit outstanding other than a credit card which I use to spend approx. £150 p/m on this and repay in full to help my credit score (which is poor). I have no other debt or credit accounts other than this.

    My partner does the same as me with a credit card that is paid off in full and has no other debts/credit accounts. My partners credit history is very healthy and she has a good credit score.

    The major problem is my credit history.

    I have 6 defaults from 2013 which most will drop off before we look to apply for a mortgage, however one will still remain until around 6-9 months after we are looking to purchase the property.

    I also lost my job in October 2016 which is why I then started working self-employed. During this time I got into financial difficulty and as my credit score was poor I used two PayDay loans. These were both settled in full by June 2017, however I repaid these using an "Arrangement To Pay" agreement with the lenders over a period longer than the original agreed repayment period.

    This means that my credit history is poor. Although, now I am in a good position in terms of debt free, regular income and low outgoings. When we come to make the application I will stand as follows:

    - No debt (other then a credit card paid in full each month) for 18 months before we apply for the mortgage.
    - Regular repayment history of my credit card paid in full for between 12-18 months and never using more than around 12% of my available credit on the card.
    - Regular income being received and much of this income being transferred to savings accounts for our deposit/money to furnish our house.

    So really I am wanting advise on the likelihood I will be able to get a mortgage (Halifax being the most likely candidate I will look to use) in about a years time considering my poor credit history and if my chances will be boosted by the fact that these issues are/will be all old issues with the newest being taking out a PayDay loan in what would be nearly two years before applying for a mortgage.

    Also is there anything else (other than paying off my credit card in full) that I can do in advance to boost my chances? My credit card limit is £1,400 and therefore I will only use 10-12% of this limit at most each month before repaying.

    Any advice would be greatly welcomed.
    Last edited by Smurf86; 14-02-2018 at 4:00 PM.
Page 1
    • amnblog
    • By amnblog 14th Feb 18, 4:45 PM
    • 10,275 Posts
    • 4,047 Thanks
    amnblog
    • #2
    • 14th Feb 18, 4:45 PM
    • #2
    • 14th Feb 18, 4:45 PM
    Today you would probably be placed Smurf.

    What the market will be like it 12 months time I cannot say.
    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.
    • Kaggs!
    • By Kaggs! 14th Feb 18, 7:57 PM
    • 15 Posts
    • 2 Thanks
    Kaggs!
    • #3
    • 14th Feb 18, 7:57 PM
    • #3
    • 14th Feb 18, 7:57 PM
    Hello, we are in a Similar situation, only we both have, defaults & have used payday loans in the past... also looking at a new build... with help to buy, got mortgage in principal... mortgage advisor is coming out next week to have a look at options for us, he ha stake a look at my husbands file and said it doesn!!!8217;t look good.... but said he is going to apply to precise for a mortgage for us .....
    • Smurf86
    • By Smurf86 14th Feb 18, 10:28 PM
    • 6 Posts
    • 1 Thanks
    Smurf86
    • #4
    • 14th Feb 18, 10:28 PM
    • #4
    • 14th Feb 18, 10:28 PM
    Today you would probably be placed Smurf.

    What the market will be like it 12 months time I cannot say.
    Originally posted by amnblog
    Placed as in you think we would likely be accepted with Halifax? Do you not consider my old history to be too big of a factor with them?
    • Smurf86
    • By Smurf86 14th Feb 18, 10:30 PM
    • 6 Posts
    • 1 Thanks
    Smurf86
    • #5
    • 14th Feb 18, 10:30 PM
    • #5
    • 14th Feb 18, 10:30 PM
    Hello, we are in a Similar situation, only we both have, defaults & have used payday loans in the past... also looking at a new build... with help to buy, got mortgage in principal... mortgage advisor is coming out next week to have a look at options for us, he ha stake a look at my husbands file and said it doesn!!!8217;t look good.... but said he is going to apply to precise for a mortgage for us .....
    Originally posted by Kaggs!
    Thank you for your reply. It's good to hear.

    Are you now well out of your financial difficulty? I wonder if the fact that only one of us has bad credit history could make a worthwhile difference?
    • juniordoc
    • By juniordoc 14th Feb 18, 10:39 PM
    • 314 Posts
    • 257 Thanks
    juniordoc
    • #6
    • 14th Feb 18, 10:39 PM
    • #6
    • 14th Feb 18, 10:39 PM
    Are you able to save up to a 10% deposit by then so you are less risky to lend to?
    • Smurf86
    • By Smurf86 14th Feb 18, 11:08 PM
    • 6 Posts
    • 1 Thanks
    Smurf86
    • #7
    • 14th Feb 18, 11:08 PM
    • #7
    • 14th Feb 18, 11:08 PM
    Are you able to save up to a 10% deposit by then so you are less risky to lend to?
    Originally posted by juniordoc
    Hi, thanks for the reply.

    Would a 10% deposit make much of a difference to a lender? This is not something that I know very much about?

    We would have enough for 10% as we will have savings that we are building up to furnish the property once we buy it that we could use if this is the only way that we can get the mortgage. Ideally we would like to stick to 5% as this would eat a big chunk of our spare cash for furnishings but certainly if this is something that would get us a mortgage then we would definitely be willing to do this.
    • Smurf86
    • By Smurf86 15th Feb 18, 9:42 PM
    • 6 Posts
    • 1 Thanks
    Smurf86
    • #8
    • 15th Feb 18, 9:42 PM
    • #8
    • 15th Feb 18, 9:42 PM
    Is there any way to determine the likely hood that we will need a larger than 5% deposit to get our mortgage over the line based on my above figures and my credit history including a 5 and a half year old default and a Payday loan paid off 18 months before applying for a mortgage?

    Considering our need to save funds for furnishings and legal fees etc it would be really tough to et a 10% deposit. We would really like to have cash in the bank spare to purchase our furnishings etc without any need to use credit.
    • csgohan4
    • By csgohan4 15th Feb 18, 10:15 PM
    • 4,271 Posts
    • 2,671 Thanks
    csgohan4
    • #9
    • 15th Feb 18, 10:15 PM
    • #9
    • 15th Feb 18, 10:15 PM
    the more deposit, the less interest you pay and the quicker you replenish your cash reserves
    "It is prudent when shopping for something important, not to limit yourself to Pound land"
    • Kaggs!
    • By Kaggs! 19th Feb 18, 9:27 AM
    • 15 Posts
    • 2 Thanks
    Kaggs!
    The last pay day loan was 2016, defaults are due to drop off in November this year, 2 are still showing as active but being disputed as they were settled a few years ago, thanks for reply
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