Poor credit - is this the best we can get?

bad_p

Hi, I’m looking for a some opinions. My partner and I are looking for a mortgage, our credit history is poor and our current broker is pushing Kensington on us. I had just accepted that this was our only option but looking around this site I’m wondering if we might be able to get better and would like a second opinion.


My partner has 2 judgements from early 2008 on his file (~3k each). They’re settled but not marked as such (we’re working on getting the paperwork for that just now). They were council tax so there is no corresponding default.


He also has 1 late payment to a mobile phone bill 11 months ago.
I’ve got 4 late payments in the last year – 2 for my credit card (a 1 and a 1 if you know what I mean), these were a mistake on my banks side and I’m trying to get them removed (they removed that late payment charges at the time with no issue). The 2 others are for my current account o/d (a 2 and a 1). The current acc!!!! ones were 10 & 11 months ago, the credit card ones about 6 months ago.
We have no outstanding debt.


We’ve got 22% deposit and are looking to borrow about 3.3x our joing income (3x if you include overtime). We can easily provide payslips for the last few months.


[FONT=&quot]The other complicating factor is that we’ve been a bit nomadic for the past 3 years, short version 3 years, 3 houses (rentals @1.7 yrs, 1.8yrs 8 mths). I’ve had 3 jobs (3 yrs, SE for 1 yr, new job for 8 mths), he’s had 4 (2 yrs, 8 mths, 3 mths, 5 mths). We’ve only just got on the electoral roll – first time since 2006. We have paperwork to prove our address for the last 3 years (well 15 if necessary ). Just wondering if our current broker has got us a good deal or if we should be able to get better (5.3% fixed for 2 yrs)?[/FONT]

Senior_Paper_Monitor

On the information you have given I think he has placed you absolutely correctly - I haven't done a detailed criteria check but it appears to match up to me.

GMS

In the current market with adverse credit it is difficult to secure any mortgage. You would most likely fail credit scoring for high street lenders.

Your broker will need to detail why Kensington were chosen on the Suitability Letter.

Please do not think you could access the best rates in the market. Your credit history eliminates the vast majority of lenders.

If you have any concerns about the deal speak to the broker.

GMS

Do you have a mortgage at present or are you first time buyers?

bad_p

Thanks, that's as I expected but I didn't think a second opinion (and third) would hurt .

Edit: My partner has had a house before but we've been renting for a few years (since moving to England from Scotland). We're using the money from his old house for the deposit.

DannyboyMidlands

You two sound like a complete nightmare and your broker has worked wonders to find that rate. You should bite their hand off.

Senior_Paper_Monitor

A word of caution - You are defined as first time buyers by Kensington.

As first time buyers you can't have their 'prime one products' - and you appear to match the 'default criteria' of their 85% 2 year fixed @ 5.29% 'prime product'.

BUT please note that the minimum income requirement for 'Prime Products' at 'over 80%' is (I quote): Minimum income over 80% LTV: Applicant 1 will need to have a minimum income of £35,000.

You don't mention your income position(s) but this one is easy to miss

bad_p

We're not over 80% LTV (78%). Perhaps you meant equal to or over? Either way, they've already had full details of our income and have given an AIP so are apparently happy with it.

Chin

What a mess of a credit report.
Are you sure you're ready for the responsibility of owning a house?

As Danny said your broker has worked wonders given your situation.

GMS

This is a case which needs to be discussed by the broker with Kensington. Kensington have so many quirks to the criteria it is easy to fall outside.

One thing I would suggest you consider would be the length of the fixed rate. You have said 2 year fixed. Whilst this may offer a lower rtae than a 3 year there are risks with a 2 year as to the reversionary rate. This is linked to LIBOR at something like 4% above. Currently this would give a sub 5% rate but in 2 years time LIBOR will probably have risen. If it gets to 3% (which would be historically low) you would go to a rate of around 7%. The CCJ's would still be on the credit file after 2 years but would have 'dropped off' after 3 years so possibly access to many more lenders including high street.

Do the sums and see if a 3 year fixed is affordable. May be worth the extra payment to open up more lenders at term end.

Treat this mortgage (assuming it goes through) as a way to rebuild your credit profile. Maintain payments and use some credit alongside it, something like a credit card for small purchases and clear each month.

Specialist 'Near Prime' lenders such as Kensington will allow you to buy a home and rebuild your profile. Treat it as a stepping stone to a better deal in the future and you will be fine.

Good Luck with it.

Senior_Paper_Monitor

Kensington don't have a 5.3% rate at the moment on anything I can find - the nearest (which I quoted) is 5.29%, which is their 85% 2 year fixed (3yr fixed is 5.69% - and I agree with GMS wholeheartedly).

At 78% the rates are 4.74% for 2 years and and 5.24% for three years on their 'prime products' / and the minimum income is £25,000 combined.

As GMS states, and what I was trying to demonstrate (with no disrespect to your broker, who appears to have done a very good job as I indicated earlier) in my post, is that Kensington's criteria are complex and often almost contradictory and it is easy to miss something during the process.

If you have got an AIP (which I wasn't aware of when mentioning the possible complexities) then you are a long way through the process - their AIP is as detailed as most lender's full applications - in terms of work on the application there is only about 10% left to add at this stage.

In short, in the current market and with your credit history I'd grab 5.3%, or whatever it is in that region, and say thank you. The next step is GE money or Blemain and figures at 9% and above !