HSBC loan after NR refusal

Richey_2

Hi there guys

I've been reading here for a while and been impressed with your great advice, so its time to post my tale of woe and hope for some help!

I have about £15k of debt, as follows:

CitiCard - £3500 (paying £50/month on agreement)
CapitalOne - £2600 (pay £20/month on CCJ)
Halifax Loan - £4400
Halifax CC - £1700
Barclaycard - £1200
Halifax overdraft - £934

Now, in Dec 2005 I managed to buy a house with my partner (now wife) thanks to her having some savings and my parents contributing towards a £12500 deposit, and having to take a nasty interest rate - we have a £102000 mortgage at £603 a month.

Since then, I missed a payment in my agreement to CapitalOne and so they pursued me for a CCJ and I agreed to pay £20 a month. I also pay CitiCard because they found me, but I've been avoiding the others because I just can't afford to pay them.

Anyway, my wife is fully aware of the situation and obviously we both want to get things sorted, so that when we reach the end of our 3 year mortgage deal, we can remortgage on a better rate.

The best way I can think to that is to pay off my creditors so that I have zero debt. I know they will take reduced payments, and I am hoping I could offer them all about half, to pay them all off FULL and FINAL (via wife) with £8000. So, in order to do this we applied for Northern Rock loan in my wifes name. She has perfect credit history, HSBC gold card, no missed payments, contract phone, mortgage etc and earns £22k so we figured she could get a £13k loan easily enough. This would cover my £8k, and pay off her £5k CC which has only just been run up to £5k in the last 4 months to pay for our wedding and honeymoon.

Unfortunately, NR turned her down, and I think I know why. We checked her credit file and I am not associated yet, so thats okay, but she is not on the Electoral Roll and NTL have incorrectly recorded 2 months arrears against her in march 2006. This never happened, she cancelled and paid up in full in Dec 2005, but they kept sending her bills to our new house, even though they don't supply any services in this area!!! So I guess that needs sorting, but it maybe isn't that bad, because the credit file shows it paid in full and satisfied by May 2006. Also, the file shows her mortgage payment as £603, but we only put £300 on the application because she pays her half and I pay mine. One other thing, Equifax don't show her HSBC account or CC, because she has never done anything wrong on them, and HSBC only record good months with Experian (and bad things with both CRAs).

So.... my question is, do you think HSBC will give her a loan despite the above possible problems (or technicalities!) because she has been with them for 16 years, no problems, and has been employed for 11 years with the same employer. We were really clinging to this loan to consolidate our debt, especially my bad debt, so that at the end of our mortgage deal, we could remortgage on a goods rate and put the remainder of the loan in it, then we would be (apart from £100k mortgage) debt free!!!!!

Sorry its a long post, I tend to go on a bit while explaining things....

One other question, if we get the loan, and I write to all my creditors offering them their share of £8000 from a 3rd party (wife) will they accept it as full and final? And, will the CCJ then be satisfied???

Thanks!
Rich

Rafter

Rich,

Loan companies take lots of stuff into account when making lending decisions and electoral roll and a NTL problem may not be the only reason.

£13k on a £22k salary with a mortgage to pay as well is a lot of unsecured debt too. Banks look to see how affordable the payments will be and on a modest income this is a lot to repay each month.

Given you already have a CCJ, that is going to be kicking around for the next 6 years on your credit file.

Personally I think your best option is to call payplan or speak to citizens advice or CCCS about your options.

I think you may be better off coming up with a repayment plan for all your creditors that is affordable and avoid taking on yet more debt.

Your wife can then focus on repaying the credit card (using 0% balance transfers or a 'life of balance' transfter to keep the interest cost well down.

As for your mortgage, it is really down to your situation in 3 years time and the lending policy of the mortgage companies whether they will still treat you as higher risk.

If you have a clean credit record for 3 years, both have good incomes and employment history and a reasonable amount of equity in your house, then getting a more reasonable rate should be possible.

Good luck.

R.

Richey_2

Thanks for your reply.

If only things were so simple... I know setting up a repayment plan would be better than getting more debt, but at least the new debt will be a "good debt" (i.e. we'll keep to the payments) and my bad debt will be history. Also, my £15k debt and my wifes £5k credit card will both be repaid by a £13k loan, so our debt will be reduced.

The other problem with me setting up plan would be that it would probably be a 5 year plan, it would require me to pay around £300 a month (unaffordable) and it would not be finished in time for remortgaging.

I know that in 2 years and 2 months I will still have defaults and a CCJ on my file, but at least they will be old and I will do nothing wrong in the meantime, plus I will have 3 years worth of mortgage payments to my name, which with the house price rise should give me around £35k equity and no debt.

The other problem, there's always a few of them isn't there, is a problem but also a good thing.... we just got pregnant (on honeymoon!) so we are expecting a baby in June 2007. My wife will go on maternity leave and so we can afford mortgage and loan payments out of my pay and maternity pay, but we wouldn't be able to afford a repayment plan plus credit card payments.

So, all in all, I feel its our only choice.... and in good news (to us anyway) my wife was this afternoon accepted for the loan we wanted from her bank HSBC, who also gave us an agreement in principle to remortgage with them on a better rate.

On the way to being debt free, and feeling good. Thank you all for your advice on here (including advice to other people that I have read and taken), it has been most helpful.


I have one more question....

I am writing to my creditors to make offers, anyone have experience of what proportion of a debt they will accept as a Full and Final settlement figure? 66%? 50%? Less???? I mean, I want to pay the debt, but if they'll accept a lower percentage, then I may as well do that if the outcome (debt satisfied on credit file) is the same!!!

Thanks again!!!

Bullett_Tooth_Tony

Hi, which mortgage provider gave you the mortgage with a CCJ? Is the rate good?

I'm in a similar position.

Bullett_Tooth_Tony

Are you sure you are not associated with your wife with any of the CRA (Experian, Equifax, Call Credit)?

If you are, that could be the reason why your wife was refused becuase you're stuff flagged up.

I was in debt with HSBC and Barclays. I negociated so hard and to cut a long story short, Barclays (£5,690) accepted £1,200 as full and final and HSBC (£7,200) accepted £1,800 as full and final. The trick is to not listen to their threats. They've done their worst - given you a Default or CCJ. So to them, getting anything out of you is better than nothing. And you can make them silly proposals, giving you have a story to back it up.

Im a debt collector for Lloyds TSB. I know all te tricks. Let me know if you need any advice.

Cheers.

Richey_2

Hi Tony

I didn't actually have the CCJ when we got the mortgage, but I did have a year of defaults on all 5 credit accounts which is nearly as bad. I also told them that I had agreements in place to repay all my creditors and advised them of the monthly amounts, although I didn't actually set these up til after! Also, we had a £12500 deposit which represented over 10% of the house price.

The mortgage was through Bristol & West with Mortgage Plc, although I'm not sure if they still do "bad credit" mortgages, I think we may have been one of their last. They were a very difficult company to deal with, made mountains of mistakes, we had to send documents multiple times, I had to ring surveyors and insurance brokers on their behalf to get everything together and it still took 3 months, even though neither us nor our vendor had a chain. Obviously, we couldn't complain cos at least we got a mortgage! Not sure of interest rate, about 6.1% I think - £603/month for the balance of £102000.

I would have a look at https://www.alexanderhall.co.uk who are a mortgage brokers. I talked to them before my partner decided to go through the high street estate agents in house mortgage advisor (a big mistake, she was one of the worst people to deal with!) and AH seemed very good. They offered me a mortgage through General Electric for over £130000 which was much more than 3.5 times our joint earnings.

Speaking of credit files, I know that my wife is mentioned on mine, but I'm not mentioned on hers... weird. I think the reason for being turned down by NR was that her HSBC current account and CC don't show up with Equifax (HSBC only record bad data with Equifax cos Experian are their main company). Also, NTL recorded arrears against her because of their mistake - everyone beware NTL, they should not be trusted!

With regards to offers, I'm offering my 5 creditors just under 50%, I'm not sure if I should start lower though so that I can barter upwards towards 50% and let them think they've won, even though its what I'm prepared to spend. I will post to let you all know how it went, for future reference!

Skint-gall

Have you made an offer to your creditors yet? How did you get on?