HELP - Mortgage declined FTB with 1 default

LeaLea2010

Hi,

My partner and I are first time buyers, my credit score is good however my partner has a default on his record for £795 which does not expire until November 2010.

Apart from that both credit histories are fine.

We have the following outstanding credit debts:

Partner
£4500 - HP
£2000 Credit card

Me
£2000 Credit card

We have put in an offer on a house for £215,000 which has been accepted and require a mortgage for £182,750 as we have 15% deposit (£32,250). Mortgage part interest only/part repayment.

The problem is I applied for a co-op mortgage 85% LTV which was subsequently declined and I think this is likely to do with the default. Unfortunately I did not do a credit check first!

I have spoken to an independent mortgage adviser who has advised us to wait until the default is lifted before we try again as the default is the likely cause and since we have had a decline there is now a footprint on our credit history which doesn’t look good. Do you know how long this decline will stay on our records?

In the meantime I am appealing Co-OPs decision on the mortgage in the hope that they change their mind - Has anyone ever appealed a lenders decision and been successful?

If they do not change their decision now should we go back to co-op after nov to see if they will reconsider or go to a completely different lender? I don’t know how long after you have had a decline you should wait before trying again. Has anyone been in this situation before?

Any advice is very much appreciated. Thanks!

sinbad182

Would you not be better off clearing the 8.5k worth of debt you have between you before applying for more credit?

LeaLea2010

The debt will be reduced to £4000 by november but the issue is that we found a house earlier than expected. With a debt of £4000 in november would you say that there is still a chance of getting a mortgage offer approved?

sinbad182

Wouldnt know, Im no expert. When I got mine, I had a few bits and bobs of credit (couple of hundred on credit card and overdraft, but payed it off every month, so it didnt make the blindest bit of difference) but nothing like yours. I guess they'll assess whether your income will comfortably cover your repayments on mortgage and for credit cards/hp.

If its the default that causing the issue, its all moot anyway, you'll have to wait for that to clear.

mudshark

What's your combined income? Having that much debt reduces the amount a lender will lend relative to income.

LeaLea2010

Combined income is £51,500. The funny thing is that given the outstanding credits and monthly outgoings we met the Co-Ops affordability calculator with more to spare, so my gut instinct is that it is the default which is the main issue here.

mudshark

Well that's quite a high multiple given the debt you have but if they go on their affordability rating rather than multiple then must be irrelevant. I was last rated on affordability by Nationwide about 8 years ago who said I couldn't afford the mortgage extension I wanted despite showing I was saving far more than the extra payment would be each month. Stupid Nationwide; I moved to another lender.

poppysarah

LeaLea2010 wrote: »

Combined income is £51,500.

Save like mad things.
Pay off the debt.
Save another 20k and look for a house next year.

Fiddlestick

LeaLea2010 wrote: »

adviser who has advised us to wait until the default is lifted before we try again as the default is the likely cause and since we have had a decline there is now a footprint on our credit history which doesn’t look good. Do you know how long this decline will stay on our records?

There is no such thing as a "decline" appearing on your credit file.

The only thing that will be recorded was the fact that a search was conducted, not the result of the search.

The search would appear on your file even if you were approved.

LeaLea2010

So if another lender looks at my credit file they will not see that I have been declined a mortgage previously?

Emy1501

You could try a whole of the market broker but in view of the fact the default drops off in Nov probably best to wait till them as you will probably get better rates. Also paying off you debts will probably help as you close to most companies’ max of 4x joint for mortgages and you have debts too.

Many online calculators are just a guide and there are many reasons for an application to get turned down but many lenders will want a near perfect credit history when lending 85% now a days so suspect the default is probably a problem.

Try the mortgage forum, also a whole of the market broker will know the best lenders to try who may disregard the default especially as it drops off in a couple of months.