Advice on my brother's problem

confused_soul

Sorry about the long post.

Before Christmas my parents bought a house for my brother which he is buying off them.

It sounds unnecessarily complicated but they were able to get a ridiculously good price by buying cash and guaranteeing completion before Christmas. The idea was that my brother would get a mortgage in the new year and buy the house off my parents, therefore freeing up their savings.

He already had a large deposit and in January he had a meeting with Barclays who said they could offer his a mortgage with a very good rate.

Now going back a bit, in 2005 he had some trouble with a certain mobile phone company who repeatedly failed to connect his phone but still charged his for 6 months. After 6 months he was advised by trading standards to contact them stating that they were in breach of contract and as such he would be cancelling his direct debit with the bank. He did this and they put a default on his credit report. He has tried repeatedly to get it removed but they have stubbornly refused.

So getting back to the situation in hand. He was concerned about this and specifically asked the mortgage advisor at Barclays if this could present a barrier to his getting the mortgage. He was told that because it was so long ago and because it was less than £200 it wouldn’t be a problem.

Anyway he submitted his application and to his surprise he was then told that he needed to send the underwriter a letter from the phone company stating that he didn’t owe them any money. Not surprisingly he hasn’t been able to get anything from them. He was even willing to pay the £130 listed on his report to move the process along but they won’t take the money because it’s so long ago that they claim they have no record of his account (they won’t put that in writing though).

Well, in the weeks (and weeks) that he’s been chasing this up Barclays have declined his application and specified that this is the reason.

The frustrating part being that as the default would have disappeared later this year and had Barclays not assured his that there wasn’t a problem both he and my parents would have waited a few months.

As it stands now any application he makes will include the question – ‘have you ever been declined for a mortgage?’ – and he will have to declare this. Whereas he wouldn’t have had to if Barclays had given his the correct advice.

What I want to know is – does he have any means of recourse against Barclays for giving his incorrect advice from the start?

I’m particularly interested in advice from people in the industry.

steveM1978

Hi,

This is unusual to be declined for something so small and so long ago. I get mortgages through all the time in cases that are much more precarious. Sounds like there may be more to this than meets the eye.

Contact the phone company again and ask for customer services. Tell them that you will be contacting the ombudsman and consumer direct to resolve the issue. Get that issue fixed before he applies again. In the meantime it will do no harm to apply for an Experian report.

GMS

Barclays (Woolwich) will hide behind 'failed credit score' for the application being declined and most likely argue that the default as a stand alone did not cause the decline.

As for the answering of the question 'have you ever been declined .....?' then he should answer yes. Reason is failed credit scoring.

There may well be options for him elsewhere. How much deposit has he got and how much is he looking to borrow? What is his income?

He would benefit from speaking to a mortgage broker, not just somebody in a bank.

Trollfever

I have heard that some mortgage lenders will not lend on properties that have been owned for less than six months by the vendor.

confused_soul

They've been very specific on this as the only sticking point so I don't think they are trying to hide anything. He is looking to borrow £100,000 for a £135,000 house and has a salary of around £30,000. I don't know the exact figure. It all seems ridiculous for such a small sum of money.

steveM1978 wrote: »

Contact the phone company again and ask for customer services. Tell them that you will be contacting the ombudsman and consumer direct to resolve the issue. Get that issue fixed before he applies again. In the meantime it will do no harm to apply for an Experian report.

Already done all this. He didn't get anywhere on the phone so he sent a letter. The letter was sent a while ago (and received by them) once it reaches 8 weeks he said he'll go to Otelo. At least that way he will have something to show the bank as proof that the default is in dispute.

confused_soul

I really appreciate your advice on this! Thank you all