Obtaining a Mortgage with a Partner in Debt - SoA now included

lottie32

Hi

I am currently in a relationship where I have a mortgage on my flat and my partner is not on the mortgage at all. In the future, I would very much like us (and he would too!) to eventually buy a flat/house together but the issue is he has debt from before I met him - lets say just over £20K. (SoA on later post) I do not have any debt at all but we are in the process of deciding what to do about his debt and the impact this will have on us getting a mortgage together in the future.

What we do about the debt is really a separate issue but I know that bankruptcy will have a huge effect and we are trying to avoid this.

Has anyone else been in this situation and can you advise how we can best move forward to getting a mortgage in the future - ie best lenders, where to look, what to avoid and if you think this will be possible at all.

Thank you very much!!:rotfl:

PS Incase anyone sees, this is on the 'Mortgage' thread too as I did not know which was more relivant. Thanks again - your help will be invaluable

leon103

Get your partner to post a SoA on this board and we can look at getting those debts down.

callansdad

Surely it doesn't have to come to bankruptancy. Second what Leon103 says.

Numpty_2

Agreed - Between us we have upwards of debts of 30k, but we can afford them and it hasnt stopped us having a mortgage - without knowing an SOA its impossible to tell

CLAPTON

you need to resolve the bankruptcy issue before even considering a joint mortgage.
if he went bankrupt with joint ownership, he would need to surrender his half of the equity in the house which may mean you might need to sell the house.
best he addresses the debt situation now and post an SoA.

lottie32

Thank you for all your suggestions so far. I really dont think he will go down the Bankrupcy route at all. We have looked at a dept managment plan, which is much better option. He did hav an IVA but that failed as he lost his job and could not keep up payments. (I did not know that it would fail if he defaulted and he only told me about that about 5 months ago or I would have paid some of the installments). I am a real worrier about money and am taking the point of looking at what decisions we make now will have what impact on our future. We are currently waiting for a reply from Experian to get hsi credit reference file as we are very confussed as he has not heard from any of his creditors for well over a year which is very odd!!

He has buiried his head in the sand for a while but at least he (with the help that I am able to give not knowing much about what is the best decision to make or way to go) is trying now to sort it out

Thanks again and this really is such a supportive place - I feel much more relaxed about things already!

kathfisch

Hi Lottie

I think the best thing to do is to sort out the debts as best you can, and not worry about the mortgage yet. A dmp will obviously have an effect on his credit rating but then it can't be too great anyway... with an IVA and defaults etc. I believe defaults stay on file for 6 years so there's not much you can do about past ones... just do everything you can to stop any more. A dmp will usually involve defaults (for any that haven't been already) so they would be on his file for 6 years from now... is there any way that the debts could be managed without this? If he has been burying his head in the sand etc then I guess it is because the repayments are not manageable, in which case a dmp would be a possible solution.

It is impossible to know without an SOA - can you get him to post one?

If you do want a mortgage in future you may only be able to get a high rate one (or possibly be refused) because of his credit history... at least until all defaults are gone from it. Perhaps you have to look at keeping the mortgage solely in your name for some time to come.

Do you operate your finances jointly? If so you need to post a joint SOA to see where cut-backs can be made in both your spending to afford the repayments in a way that has the least impact on his credit file. It seems from what you have said, though, that he has kept these things separate from you. If all your finances are separate you want to be sure there is no association between you on credit records... otherwise any future applications for credit in your name could be affected. Obviously this is not possible if you have joint financial products such as a current account.

A full statement of affairs is the only way to get specific help, either from this board or an organisation like CAB or CCCS. Have a look at the 'sticky' at the top of this board for a template of how to do an soa (its called 'first time posters' or something) and take it from there.

Best of luck

Kath

lottie32

Hi again, I dont know his exact SoA but he has £750 take home and owes around £24000 so paying it all back seems such a unmanagebale situation - it seems he will be paying back forever! Here is a rough guideline:

Rent to his mum £200 (he pays when he can afford it)
Phone £30
Food £75 - He eats at work and at his mums but this is his contribution to shared food at the weekends and general household goods
Going out £Vairies but around 150 (over estimate)
Clothes £very rare but say £50
Driving lessons £100 (he is not giving this up under any circumstance!)
Personal Hygene £20

Total £575 so that leaves £175

My thoughs are even if he does set up a payment schedule ie DMP what happens when we want to start a family or buy a house together? He would not be able to afford the re-payments anyway due to the added committments. He had an IVA which failed as he could not meet the payments. We have looked at bankrupcy but I do think that is a very last resort. Do we just leave it and wait for 6 years to pass (well 4 now) so it just gets wiped anyhow, despite the effect it will have on his credit history - which is poor anyway as his IVA failed! Its so hard to know how to advise him or which way to turn! We have spoken to the various free debt services and debtline advised us to get a credit reference file, which we are waiting for, as since his IVA failed just over a year ago he has not heard from any of his creditors.

We would definatley keep our finances separate for the forseeable future so I can retain my good credit rating.

dumpy

Hi Lottie32

I'm in a similar situation with an OH who is hopeless with money and has a terrible credit rating.

I'm afraid that I took the decision that I was going to keep all our finaces seperate and I own our house and he has no charge on it. I love him very much and I see our future together BUT I need for my peace of mind to make sure that my money and our future is safe.

Maybe I shouldn't have to do this but I know his weakness and this is the only way I can cope with it.

Just the way I deal with a similar situation, hope it helps to hear you are not the only one with this problem.

lottie32

Hi Dumpy

Thank you so much for your message and it has made me feel so much better about the situation. Like you, I have no doubt that my partner is the one and we will be together despite his situation with money. When I first met him, he would spead all his wages by week 2 of every month which would drive me nuts! He is now much better and even has money left by the end of the month. Like you, I will keep my finances separate for the near future so I have piece of mind about my credit rating and future.

Do you mind me asking - has your partner paid of his debts or is he still in the process of doing so? What course of action did he take if he paid them off?

Thanks veru mchh for your support

cooldudecol

I was in the same position as my OH has a bad credit rating.

It was agreed between us that I was to apply for a mortgage by myself, as if we were financially linked then it could all go pear shaped for both of us, if we wanted to get additional credit from somewhere else.

I remember Martin has said this as well.

When I applied for a mortgage, my advisor halfed my household bills (as my OH contributes to the bills - so this would mean that I would get a larger mortgage.

Good luck!