Refused mortgage

23southampton23

Hi everyone,

Just after a bit of advice / tips on my current situation and would like to hear from anyone who may of been in a similar position.
I am a first time buyer and have a 10% deposit for the price range im looking at. Problem is I have failed a credit check with Natwest and the Post office. Halifax would lend but only with a 15% deposit which at this point is not possible. After failing on credit I looked on my Experian report and found the issue is between 5-8 missed mobile phone contract bills. These happened 3 years ago now and since then I have had loans, car finance and credit cards and not missed a payment. Therefore it seems I am being refused mainly because of these missed payments, again the problem is I believe these stay on file for 6 years. In turn will that mean im unlikely to get a mortgage with anyone but Halifax for 3 years? As it will take about a year to get an extra 5% deposit.
If anyone can help on this will be much appreciated. I want to buy somewhere asap but looks like will be a while yet!!!

Senior_Paper_Monitor

90% mortgages are for the 'whiter than white' applicants.

A fistfull of missed payments are unlikley to be acceptable.

Your three applications may not have helped the situation for the short term - stop now.

I suspect that if you continue saving (lower LTV) and re-apply after a sensible time (by no means the full 'six years') you will be successful.

Examine the gifted deposit (parents) route.

Consider using a broker rather than random applications.

I'm being "especially nice" but those are the cold facts.

wackorash84

Hiya,

Sorry to hear about your problems.

My advice would be to seek a whole of market mortgage broker. They would be able to filter lenders that would be willing to lend to people in your current situation.

They would also have the communication line open with the lenders to ensure your application will have higher chance of being accepted.

Good luck!

Meeper

Yes, use an adviser (I hate the word broker), but please note the following:

So many people have no idea what it means to "Fail" a credit scoring process. I shall explain. Credit Scoring is NOT the same as looking at your report from Experian or Equifax and checking your historical data. That is your Credit Report, or Credit File, and it is not the whole story. Credit Scoring as far as finance application goes is a series of scores (the clue is in the name) and each answer that you give to a question scores a certain number of "points". There is a minimum score cutoff point that you need to reach in order to be accepted, and this score is different with every lender.

Allow me to illustrate:

Under the question "Marital Status", being Married will score more credit points than being single.
Under the question "Time at address", 5 years will score more credit points than 18 months.
Under the question "Occupation", Solicitor will score more credit points than Cleaner (no offense to any cleaners who are reading).

In addition to this general information, each lender applies different scores depending on the demographic that they are targeting. So, if a lender wants professionals mainly, they may give (for example) 10 points for solicitor or accountant, whereas another lender who is doing a more general lending policy may only give 6 points for that.

So, you answer all of their questions and all of your answers come up with a total "score". This is then combined with the quality of your past credit file in order to come up with a final score. If your final score is above the cutoff required as set by the lender depending on their policies, you get your mortgage. If you fall below the cutoff required, you don't get the mortgage.

To say that you have failed the score because of missed telephone payments may well be correct. It may also be miles wide of the mark. If you are in rented accommodation, 6 months at your address and less than a year at your previous address, in a non-skilled profession and have only been in your job for a year, you're going to fail even with a squeaky clean history, because you show none of the stability that a lender is looking for from a mortgage customer.

Hopefully that helps a little with your understanding of the situation.

M

23southampton23

Thanks for the replies...
It was a mortgage advisor who tried to get an agreement in principal with the lenders mentioned prior. His advise was to cut down 'available credit' and see him again in 3 months after being refused. I just cant see that making an awful lot of differance to the immediate outcome. I think I will just have to save another £7000 so I have 15% deposit and see what happens then....

rising_from_the_ashes

Meeper wrote: »

Allow me to illustrate:

Under the question "Marital Status", being Married will score more credit points than being single.
Under the question "Time at address", 5 years will score more credit points than 18 months.
Under the question "Occupation", Solicitor will score more credit points than Cleaner (no offense to any cleaners who are reading).

In addition to this general information, each lender applies different scores depending on the demographic that they are targeting. So, if a lender wants professionals mainly, they may give (for example) 10 points for solicitor or accountant, whereas another lender who is doing a more general lending policy may only give 6 points for that.

So, you answer all of their questions and all of your answers come up with a total "score". This is then combined with the quality of your past credit file in order to come up with a final score. If your final score is above the cutoff required as set by the lender depending on their policies, you get your mortgage. If you fall below the cutoff required, you don't get the mortgage.M

Meeper, thanks for that ..... I knew there were other factors apart from your credit file but never knew the types of things that might be looked at - so it's been really useful to get an idea of these (and a bit frustrating to know you can be turned down for something like your job not "fitting").

wackorash84

23southampton23 wrote: »

Thanks for the replies...
It was a mortgage advisor who tried to get an agreement in principal with the lenders mentioned prior. His advise was to cut down 'available credit' and see him again in 3 months after being refused. I just cant see that making an awful lot of differance to the immediate outcome. I think I will just have to save another £7000 so I have 15% deposit and see what happens then....

Mortgage adviser at the bank or do you mean an independent mortgage broker?

Also in my honest opinion, it might be cheaper to pay down your debt rather that save the additional 7k especially with interest rates for savings being at this all time low unless you credit cards, loans and car finance are all on 0% APR.

23southampton23

It was countrywide so independent from banks. As for credit my loan and car finance were paid off two years ago, I just have an interest free credit card with £1500 outstanding. In the first message I was just showing I have had other forms of credit woithout missing a payment. Thanks for your advice still

kingstreet

Countrywide mortgage service has a limited panel of around ten lenders, is tied to one life company and charges a fee.

Enough said?

Meeper

rising_from_the_ashes wrote: »

Meeper, thanks for that ..... I knew there were other factors apart from your credit file but never knew the types of things that might be looked at - so it's been really useful to get an idea of these (and a bit frustrating to know you can be turned down for something like your job not "fitting").

Let's not go over the top now. Yes, your job "not fitting" can be a factor, but that will never be the sole reason for someone being refused. If you are in a low-scoring job but you have been there for 20 years, in your house for 10 years and run your credit well, it's not an issue. If you are in a low-scoring job, been in it for 2 months, have very tight affordability, living in rented accommodation for the last 9 months, then all of those things combined would work against you, not just the job.