Mortgage with a Default

noviceneedsadvice

Hi,

Is it possible to obtain a mortgage with a default on your credit file? Already turned down by HSBC when obtaining a Mortgage Quotation but understand their lending criteria is very high?

The default in question has been settled and will hit its 6 year point in August and hence be removed from the file.

Apply now or wait until it's removed or will it not make a difference?

Thanks to all.

GMS

How much was the default for? Is it the only blip on the credit file?

How much are you looking to borrow?
Property value?
Income?

HSBC were always likely to decline. It is vital you apply to the correct lender rather than the cheapest as too many applications will ruin your credit rating

noviceneedsadvice

Hi there and thanks for the response.

The default was for £500 and has been settled. It will be removed from the credit file in 7 months anyway though. No other missed payments or anything negative in that sense.

Two active current accounts with high street banks. Main account has a 4k overdraft but only £800 at most into it on any typical month. 1.5k on a Visa (2k limit) and another 1.2k on a Mastercard (2k limit also). Two active mobile phone accounts never missed a payment. History of car loan now settled, personal loan now settled, both no missed payments and also got a Capital One Visa with nothing on it but good history with no missed payments.

Renting at moment, moved house twice in past 3 years, but registered on electoral roll at current home and have registered at every address I've lived at in past.

Experian gives score as 854 which, despite being close to 999, is only given as 'average'!

Earnings 36k.

Looking to borrow something around 85k for a property value of 100k (basically got 15k as a deposit but been advised that 15pc is the minimum I should try with).

Once again, thanks for your help.

GMS

Ignore credit scores from credit agencies. If you were applying for a mortgage with Experian it may be relevant, but as lenders have their own scoring criteria it is a waste of time.

May be options for you. Best thing would be to speak to a good broker.

NEgatives will be credit card balances and overdaft being used. May be looked upon as living outside of means by a strict lender.

noviceneedsadvice

Thank you that was really useful.

I'm making a conscious effort to pay it all off at the moment and it won't take me more than a few months, at most. I've got plenty of disposable income and definitely not living beyond my means, though I see how it can look like that.

I'm thinking that, coupled with the apparent forecast fall in house prices this year (you most likely know a lot more than me about that and the truth/rubbish in it), plus the fact the default will be gone in August, I might as well hang fire a few months a keep saving whilst clearing the balances as well. Added bonus that the deposit will be bigger too.

Thank you.

GMS

If you can save a 20% deposit then you should have access to more lenders and rates.

Clearing your credit balances will help affordability, although having the borrowings and maintaining them improves credit scoring. Catch 22 really!! Use credit cards for small purchases and pay in full every month once you clear balance.

As for falling prices I wish I knew the answer. Still a chronic shortgage of housing in this country and whilst mortgage lending remains restricted there will be an increase in rental properties so this will maintain the market in my opinion. Overall, purchasing a home should be viewed as just that, a home not an investment. Whilst mortgage repayments stay the same as or lower than rent there is an argument for buying regardless of short term price falls. Property prices will rise over the longer term.

herbiesjp

The £500 default will fit the standard criteria of some lenders.

Waiting though will mean saving more funds, and then the default falling off your credit file.