Can we obtain new mortgage with one arrears payment on credit file? NR Mortgage

RunForYourMoney_2

Hi All,

I currently have a 100% Fixed Term Mortgage with Northern Rock which ends in Feb 09. I also unfortunately have one arrears payment for the mortgage in the last 12 months which has now been paid off but which of course still shows on my credit file under (checkmyfile etc). My current credit score is 550 with equifax, 600 with Experian and 660 with Callcredit. Thus my score is not great but not terrible.

My question is, with the arrears payment on my file, and an average credt rating, will I be able to get a new mortgage, if I have some deposit.

My outstanding mortgage is: £240,000. Property valued recently at £275,000.

Or should I sell the house, and use the money to pay existing credit cards off, and rent for a while?

The only good thing is my salary from company turnover of £140,000 a year, but have loans and credit/store cards of upto 38K.

Id be most grateful for any advice? I have been furiously trying to maintain monthly payments on time and also try and eat into some of the credit card balances, but with interest rates, the interest on store and some credit cards has spiralled, and minimum payments are just not enough

Thanks

JayZed

You don't say when your payment in arrears was. If it was before December 07 (i.e. more than a year before you need to apply for a remortgage) then its impact on your credit scoring will diminish by the time you need to apply for a remortgage, though it will still be on your file. In other words, arrears more than 12 months ago does have a negative impact on your credit scoring, but is not as bad as arrears within the past 12 months. You might find that sucking up Northern Rock's SVR for a couple of months before remortgaging might allow you to get a better remortgage rate and save money in the long term.

But if you've got credit/store card debts of 38K that's also going to have an impact on a lender's calculations as to how much they're willing to lend you and at what rate. I hope that at least you haven't missed any payments on those?

Your income on the other hand is a big plus, if you have three years of certified accounts for your company to show the lender. If not, then you're probably looking at a more expensive self-cert mortgage.

All that being the case, you may be better off selling and renting for a while -assuming that you can sell at more than your outstanding mortgage value. You say that your property was valued at 275K "recently" - but how recently? I suspect you won't be able to sell it for that much.

Conrad

It is likely you wont find a deal worth remortgaging to in view of your lowish score and the likelyhood your property will be down valued (every client is certain they know value, they all say one sold over the road last week for 'x' but I find valuers are comming in considerably lower).

In your situation I think I would sell up, clear debt and start again. Property prices should continue to decline for a while.

RunForYourMoney_2

JayZed wrote: »

You don't say when your payment in arrears was. If it was before December 07 (i.e. more than a year before you need to apply for a remortgage) then its impact on your credit scoring will diminish by the time you need to apply for a remortgage, though it will still be on your file. In other words, arrears more than 12 months ago does have a negative impact on your credit scoring, but is not as bad as arrears within the past 12 months. You might find that sucking up Northern Rock's SVR for a couple of months before remortgaging might allow you to get a better remortgage rate and save money in the long term.

But if you've got credit/store card debts of 38K that's also going to have an impact on a lender's calculations as to how much they're willing to lend you and at what rate. I hope that at least you haven't missed any payments on those?

Your income on the other hand is a big plus, if you have three years of certified accounts for your company to show the lender. If not, then you're probably looking at a more expensive self-cert mortgage.

All that being the case, you may be better off selling and renting for a while -assuming that you can sell at more than your outstanding mortgage value. You say that your property was valued at 275K "recently" - but how recently? I suspect you won't be able to sell it for that much.

My payment arrears are for 1 month and in the last 12 months.

Your point about staying on SVR for a while is interesting, as I think it might put our monthly repayments up to an extremely high level. Our credit score is not graet, but its not unrecoverable too. I mean 600 out of a 1000 is mainly due to the amount of debt we have rather than arrears I think? If my 5.25% repayment option is currently costing us £1300 a month what might the new NR SVR rate end up costing us per month? Any ideas?

You mention missing payments on other accounts. There are 3 other accounts which have late payments. Income will be around £140K, circa £13000 a month, so Im hoping that will help us repay the debts. Its a knock on effect at moment as APR is so high on the store cards we have to pay double to make any impact. I have 3 years of certified accounts, and all my business bank statements.

How does Self Cert Mortgage work, and what are its benefits?

House was valued 2 months ago at £275K, so I presume if I sell before Feb 09, then its value will have gone down, but by how much ?

Many Thanks for any further advice.

Toughluck

Unfortunately as others have mentioned it is very unlikely you will re-mortgage.

not knowing your mortgage term but making a wild gues, I would imagine (at SVR of 7.49%) that your payments would increase to around £1650 a month.

BTW, 7.49% is not a high rate if you have had 1 in 12 mortgage arreras believe you me. Stay with Northern Rock as you will just be wasting your time trying to re-mortgage at a high LTV. Any new lender noticing your income would be staggered to understand why you missed the payment in the first place. This in just my opinion though.

RunForYourMoney_2

Conrad wrote: »

It is likely you wont find a deal worth remortgaging to in view of your lowish score and the likelyhood your property will be down valued (every client is certain they know value, they all say one sold over the road last week for 'x' but I find valuers are comming in considerably lower).

In your situation I think I would sell up, clear debt and start again. Property prices should continue to decline for a while.

Many Thanks Conrad.

So basically if my house was valued at £275 2 months ago, then if I sell in 2 months say its more than likely that I will get buyers offering around £260 or less?

RunForYourMoney_2

Toughluck wrote: »

Unfortunately as others have mentioned it is very unlikely you will re-mortgage.

not knowing your mortgage term but making a wild gues, I would imagine (at SVR of 7.49%) that your payments would increase to around £1650 a month.

BTW, 7.49% is not a high rate if you have had 1 in 12 mortgage arreras believe you me. Stay with Northern Rock as you will just be wasting your time trying to re-mortgage at a high LTV. Any new lender noticing your income would be staggered to understand why you missed the payment in the first place. This in just my opinion though.

I have had one month arrears in 3 years of mortgage payments, not 12. The payment wasnt missed it was paid but overlapped into the new month, ie. paid on 30th of month but didnt clear until the new month. Northern Rock still placed a one month circle on my cerdit file.

Also the business had a large corporation tax bill which reduced monthly income into personal account for one month, and as I said originally a large portion of the income on a personal level each month, pays off loan and credit card bills.

RunForYourMoney_2

Toughluck wrote: »

Unfortunately as others have mentioned it is very unlikely you will re-mortgage.

not knowing your mortgage term but making a wild gues, I would imagine (at SVR of 7.49%) that your payments would increase to around £1650 a month.

BTW, 7.49% is not a high rate if you have had 1 in 12 mortgage arreras believe you me. Stay with Northern Rock as you will just be wasting your time trying to re-mortgage at a high LTV. Any new lender noticing your income would be staggered to understand why you missed the payment in the first place. This in just my opinion though.

So can I sell my house, its one month (actually 1 day ) arrears?