Getting a mortgage if your partner has bad credit...

puzzled-puddle

My boyfriend and I have been saving to by a house and have a £10,000 deposit which should be enough for 10% deposit on a decent starter home in the area we live.

My problem is that the other half made some bad money choices when he was younger (nearly 10 years ago) and got himself in quite a bit of debt. He is now older and wiser (I have no reservations about his moving in with him money wise, he learnt his lesson) and has had a steady job in he navy for quite a few years in which time he has also managed to pay the majority of the debt. He has about £1800 left which he is planning to pay as a lump sum after christmas, but his credit rating still leaves an awful lot to be desired.

I have a 'good' credit rating on experion of nearly 900 and I have a steady job as a teacher that is unlikely to be affected by the credit crunch. I have some reservations about applying for a joint mortgage and his bad rating affecting mine.

Has anyone been in a similar situation and how have you resolved it? How long will it take him to improve his score once the debts are gone?

We have considered getting the mortgage in my name but how likely am I to get one as a single applicant?

Any advice will be gratefully recieved!

Thanks in advance!

asajoseph

I know a bit about this as I'm in exactly the same situation. My partner had problems about 5 1/2 years ago, and it's caused us a few hiccups so far.

My advice is as follows:

1) as a sole applicant, you should be unaffected.
2) Defaults stay on your credit record for 6 years, so from the sounds of it his should be mostly dropped off by now
3) If they're less than 6 years, some lenders will still be reasonable, depending on the circumstances. Some however, will not - avoid Abbey, at all costs.
4) If the defaults are off his credit record, large outstanding debts (a few thousand) will still affect your score.

asajoseph

Oh, and:

5) If you do end up making a joint application, do your research on the lender before letting them credit score you. Speak to an IFA / broker, and try to get a feel for the lender's attitude toward people in your specific circumstances. We actually ended up getting scored twice by Abbey, because we were poorly advised by someone in their branch, and you want to avoid getting too many checks done.

Fire_Fox

If you are the only one named on the mortgage you will need to be the only one named on the deeds, which means your partner won't have any rights to the equity unless you set up a specific agreement AND the bank agrees to it. This is unlikely if your portion of the deposit is very small as it leaves them no leeway if you default on the mortgage and they repossess. It's not wise for your partner to have any savings whilst he still has debts, as he will be paying more in interest that you are earning - there is an article on the main MSE board about this.

asajoseph

As I'm in a similar situation, there is, I believe, something called a Deed of Trust that can protect someone who puts capital into a property that they do not technically earn.

I have not researched it yet, but from explaining our similar situation to my solicitor, this is what they indicated.

Fire_Fox

asajoseph wrote: »

As I'm in a similar situation, there is, I believe, something called a Deed of Trust that can protect someone who puts capital into a property that they do not technically earn.

I have not researched it yet, but from explaining our similar situation to my solicitor, this is what they indicated.

I couldn't remember the name, but yes that is right. However anyone with a charge on the house (the bank) needs to agree to this as it's effectively a second charge - the OP and her partner only have a 10% between them so I don't think they will agree as they will want that deposit as a cushion.