Good Deposit, Good Job, no debt - NO MORTAGE! HELP!

feistycheese

Hi All.

Im a 29 year old chap who has had the good fortune of living rent free over the past few years (looking after the home of a disabled family friend). However, this situation wont last forever, and it is likely that in the next 12 to 18 months I will move out and buy my own place as a 1st time buyer.

Now, Ive already got decent savings for a deposit (near £20,000) and have a stable and good job at £28,000 a year. I would be looking for a property at around £100,000 (there are plenty of good houses where I live at that cost - live in NW England).

I spoke to an advisor at my bank today (HSBC), who said it is unlikely that they would give me a mortgage as I havent got a good enough credit rating. This, to say the least, has really got me hot under the collar, as I have never been in debt, always saving and paying for things upfront if I wanted them, saved religiously and have always kept my finances in a healthy state. I feel like im being punished for doing the right thing!

Anyway, I dont want to go out and start getting small loans and start spending on credit cards just to improve my rating, as I have never lived my life that way and dont want to start now, so I would be greatly indebted (ha!) if anyone could advise me on how I could increase my rating without having to change the way I use my finances.

Thanks!

Chris in Preston.

happybroker

It's a sorry state of affairs I agree, I was with a client yesterday in the same position, he's been declined by half a dozen lenders.

Going out and trawling the high street having credit searches done will do you no favours either.

I am completely against borrowing money for the fun of it (I've seen too many people over the years get into a rare old mess) but using a credit card responsibly is one way of improving your situation (ie clearing the balance every month), it needs only to have a very small limit.

A better thing to do is to use the time you have to increase your deposit which will increase your score and when you are ready speak to a quality broker who will know who will and who won't entertain your situation. Be clear about the fact you don't have, and never have had, any form of credit to avoid a load of wasted time.

all the best with it

mothershipton

hi, im sure there must be advice on here somewhere about improving credit rating. But i would suggest getting a credit card and use it for your regular outgoings and pay off monthly If you get a reward or cashback card then you quids in!
Also are you on the electoral roll anywhere as this also helps.

I think this situation is quite common and although you are eminently sensible with your money banks are dim and unless you have a record of borrowing money and paying it back then they wont lend to you.
gone are the days when you sat down with the bank manager and show him how sensible you were with money.

good luck

dte666

Im a broker and just because HSBC said no doesnt mean everyone else will, they have very stringent criteria, try the likes of Halifax who may pass you on a C score, Leeds did'nt used to be too bothered either but it's been a while. Other suggestions here are accurate though, be on electoral roll, get credit card and repay it quickly even if only for weekly shopping, there is no quick remedy to getting a good rating, but Im certain with a 20% deposit you should be ok. Also look into Halifax doing a 5% vendor gifted deposit which can mean if it works that ur loan to value is 75% instead, but go to a free whole of market broker local to you. HSBC are not the B and end all!! Good luck

koexelek

dte666 wrote: »

Im a broker and just because HSBC said no doesnt mean everyone else will, they have very stringent criteria, try the likes of Halifax who may pass you on a C score, Leeds did'nt used to be too bothered either but it's been a while. Other suggestions here are accurate though, be on electoral roll, get credit card and repay it quickly even if only for weekly shopping, there is no quick remedy to getting a good rating, but Im certain with a 20% deposit you should be ok. Also look into Halifax doing a 5% vendor gifted deposit which can mean if it works that ur loan to value is 75% instead, but go to a free whole of market broker local to you. HSBC are not the B and end all!! Good luck

they certainly aren't. They just cherry pick the best stuff.
I reckon this case would pass OK with Halifax or Abbey

opinions4u

feistycheese wrote: »

Im a 29 year old chap who has had the good fortune of living rent free over the past few years (looking after the home of a disabled family friend). However, this situation wont last forever, and it is likely that in the next 12 to 18 months I will move out and buy my own place as a 1st time buyer.

Now, Ive already got decent savings for a deposit (near £20,000) and have a stable and good job at £28,000 a year. I would be looking for a property at around £100,000 (there are plenty of good houses where I live at that cost - live in NW England).

It's a good starting point.

I spoke to an advisor at my bank today (HSBC), who said it is unlikely that they would give me a mortgage as I havent got a good enough credit rating.

HSBC are notoriously picky. They tend to lend prudently, hence the fact that the UK government owns no part of them!

This, to say the least, has really got me hot under the collar, as I have never been in debt, always saving and paying for things upfront if I wanted them, saved religiously and have always kept my finances in a healthy state. I feel like im being punished for doing the right thing!

No you're not. But as well as trying another lender when the time comes, you can strengthen your credit rating in a number of ways.

- ensure you are on the voters roll
- maintain a landline
- use a credit card a couple of times a month (clearing the balance in full monthly)
- keep a mobile phone/tv contract up to date
- having a bigger deposit; 25% may trigger more generous products and scoring

One question you are asked about home ownership probably has the answer options of owner/tenant/parents/other.

Credit scoring systems often dislike "other" as an answer, so addressing some of the other issues above can improve things.

herbiesjp

Have you got a copy of your credit file?

This may give an indication to your score, although your application would be based on the lenders' own scoring system.

Did you actually apply to HSBC? As otherwise I do not see how they would know what your credit rating would be like

Stable employment history and address history can also improve your score with lenders

Even silly things like putting three copntact telephone numbers, inputting an address in the correct format can help improve your score on a lender scoring system.

I can't see you have too many problems, to be honest in getting a mortgage at that level with that income

Plenty lenders will take you on.

Ulfar

I have also just fallen foul of the same thing.

I went through a broker who recommended Northern Rock or Halifax.

Both declined even though I have a 40% deposit, good job and no debt. The excuse in both cases was a poor credit score.

I was incensed so went for a chat at Natwest who I have banked with for a long time, 20 mins later I walked out with a 5 year fix at a good rate. Their brokers opinion was that both Northern Rock are advertising products that aren't really available.

dimbo61

Apply for a cashback credit card from american express or other CC companies doing cash back and buy your shopping/petrol/clothes and clear the balance each month without fail.
This helps to improve your credit score and earn cashback as well GOOD LUCK