What are the chances?

billybraggtastic

I have a mountain of debt from a failed business. This is currently being addressed by a Debt Arrangement Scheme (DAS) situation and I have paid 17 installments of 94.

After the DAS was in place, my wife was made redundant and now has another job on a lower salary. For the past year we have stripped back on most everything and we scrape by month to month. With the prospect of this continuing for a further 6+ years we decided to sell our house, find somewhere cheaper and use the residual to pay off the debt. Phase 1 is complete and we have accepted an offer on our current house.

Now we want to find somewhere to buy but the question is, how are my exisiting lender (Halifax) going to treat the situation?

We will require to make a new mortgage application and we would like to borrow the same amount on the new property as we currently borrow. Affordability shouldn't be a problem and ultimately we will be debt free (except mortgage), LTV should be around 65% (up from 45%). My credit rating however will be trashed.

Do we have a hope?

chowfornow
bbt

CloudCuckooLand

Perhaps should have asked that question before selling, as if the answer is no you will end up in rental, which may or may not suit your location/circumstances.

Your lender *may* agree to simple porting, if the same amount. Worth asking.

http://www.cml.org.uk/cml/policy/issues/760

"Register of DPPs
A register will be maintained of all DPPs entered into. It is expected that lenders will search this register as part of their credit reference checks before lending money."


A DAS is similar to the English DMP? In which case, I think creditors can seek to object to changes in the arrangement. One of the terms of DMP, I believe, is to not take on additional credit - which is where "porting" may be less for them to object to, than a new application.

Perhaps best to post this on Bankruptcy/Debt forums, as its quite specialised, even though relating to mortgage.

GMS

Porting your mortgage is not a case of simply switching from one property to another. It will involve a new application with criteria needing to be met.

Call the lender and ask them. However the new application will be of higher risk to the lender due to your current circumstances and higher LTV.

Good Luck

billybraggtastic

Well we've gone down the road with the Halifax and they have rejected our application - not suprising given my credit rating. My partner has arranged to visit the local branch to see if there are any alternative options available but again we're not holding out much hope.

The galling thing is, if we stayed where we were there would not have been any problem from the Halifax's perspective. We would have continued to pay our mortgage and everything would be rosy. Unfortunately, we want to get the monkey (debt) off our back hence the sale.

One issue that has raised its head is the interconnected aspect between my wife and I. I have been led to believe that if my wife was to make an application now, in her own name and based on her earnings, she would likely be refused due to her relationship with me. I always understood your debt was your own and in this instance - except a paid up to date joint mortgage with me - my wife has a good credit history (car finance ending in July and everything else paid on time and up to date).

With the residual equity from our property and a mortgae based on my wife's earnings we could actually buy a modest home.

Seems to me that the lending philosophy of our banks has gone from one extreme to another. they do have a lot of money to pay back to the taxpayer though!

billybraggtastic

This has taken an unexpected twist.

Following the visit to the bank an appeal against the previous decision was submitted and Agreement in Principal has now been granted.

What does this mean exactly and what are the potential pitfalls (last thing we need is to bolt off down a road that may see our hopes dashed!)

thanksinadvance
bbt

iwantasmallholding

Means they have looked at your situation, and agree to give you a mortgage providing:-
The house you buy is worth what you say
The survey comes back clear
They will probably offer with the condtion you clear the current debts, on completion of new purchase
Everything on the application is accurate.


MAKE SURE YOU READ THE SMALL PRINT and check it is a FULL offer
and not one where by they have just looked at the LTV and income, and not credit searched you etc.

Personally before you sell your current home I would find a new one to buy, as it is cheaper to buy and sell at the same time (legal fees, registration fees etc)

iwantasmallholding

P.S it is not garenteed till they have agreed to lend on a property! funds are reserved, and the full application is complete.