Transfer of Equity / Negative Equity / Credit Report

andyquid

Hi, I'll try and keep this very brief, but if anyone has any advice on my problem it would be much appreciated.

I purchased a property with my girlfirend in October 2007 for £87,000. The finance borrowed was 102% split up £82,650 (repayment mortgage) and £6,350 (unsecured loan) with Coventry Building Society's Godiva Mortgages. The mortgage was a 50/50 joint mortgage.

We split up in February 2010 due to a change of heart on my behalf, since then, we have both moved back with our parents and the property has been rented out. It was agreed that by selling we would be incurring a heavy loss due to the property prices falling at the time. We were also unable to qualify to take the mortgage on in our own names due to our individual salaries.

I recently managed to get myself a new job and my new salary allowed me to qualify financially to afford the mortgage on my own (confirmed by Coventry BS).

In order for the "transfer of equity" to take place, according to Coventry BS, my credit report must show that my current address is that of the property in question and not my parents. As i have been living with my parents for nearly two years my credit report has been updated to reflect this. With this in mind i suggested to my ex that i move into the property and we take out a legal agreement to protect both our interests (mainly mine to ensure she can just turn up and decide to move back in).

Unfortunately between February 2007 and now i have racked up £4,500 worth of debt on credit cards, mainly due to my previous salary. I am worried that this will show, or have an impact, on my credit report and i will therefore be refused the mortgage. I then decided that it would be best to place a 2 year term on the legal agreement to give me time to: (a) live in the property and allow my credit report to update my address information (b) give me enough time to clear of my credit card debt.

I suggested this to my ex-partner and she has asked that the term on the legal agreement be "6 months maximum". I worried that this will not be enough time for my credit report to repair itself and therefore would be wasting money taking out the legal agreement in the first place.

Am I being overly worried about my credit report having an impact on my transfer of equity application? Any advice would be much apreciated!

Many thanks.

Meeper

Your credit report isn't broken, therefore not in need of repair. Having credit cards doesn't mean you can't have the mortgage. Have you asked Coventry about this? How do you fit on their affordability calculations?

For the record, your £4,500 on credit cards wasn't due to your previous salary, it was due to you spending more than you earned, which isn't anyone else's fault.

Best plan would be to check with Coventry to see if you have sufficient income to get the mortgage in your own name, taking the credit cards into account. If that's all you have, then it really shouldn't be a big issue.

andyquid

Thanks for the replt Meeper. I have checked my credit report with CallCreditCheck and it shows that i am currently 3/5 star rating. I believe this is due to the high level of outstanding balances on my credit agreements.

I have already had my affordability confirmed with the Coventry, I'm just concerned about my credit report being 3/5 star when i have never missed a payment or never made a late payment.

Does the fact that i am an existing customer with Coventry improve my chances of have my transfer of equity application approved?

A

Meeper

Ratings given by agencies (especialyl CallCredit) don't mean a thing.

If Coventry have said that you fit their affordability criteria, then that's all good so far. Why don't you just make the application and see what happens? I would expect that if your credit history (which is not the same as credit rating) is satisfactory, you should be in decent shape. Your rating however will incorporate things like your stability, which will not be helped by a short period of time in employment.

andyquid

My concern would be making the application and being refused, therefore having a "refused" black mark on report. I've no doubt that i can afford the mortgage, I'm just concerned that I will be moving property again and this will show on my credit report. Although you say they dont mean a thing, I'm concerned that they could impact on the Coventry's decision.

I want to make sure that i am in the best possible position, credit wise, before making the application.

CLAPTON

there is no such thing as a 'refused' mark; it merely shows that you have made a credit application