Will default hamper chances of obtaining a mortgage?

edinburgher

Basically looking for thoughts on whether my wife and I are likely to obtain a mortgage in the current climate.

I have a default from June 2006 (satisfied in 2010), due to fall off my credit report at the end of June 2012. Wife's credit history is squeaky clean, as is mine apart from this default. Both have credit cards, current accounts and phone contracts run perfectly (with £0 outstanding debts).

Joint income of £58k, looking to buy a property costing no more than £140k with a 10-15% deposit depending on what we find. We have £23k+ in savings for deposit and fees, can raise a little more if required, but not lots.

Are there lenders who would consider us *now*? Lease is expiring soon and we'd like to lend before stamp duty becomes a consideration in April. Or should we be waiting to July onwards?

DVardysShadow

edinburgher wrote: »

... Are there lenders who would consider us *now*? Lease is expiring soon and we'd like to lend before stamp duty becomes a consideration in April. Or should we be waiting to July onwards?

The lenders who would consider you now might cost quite a bit more. And the stamp duty on £140k might be wiped out by the extra interest over less than a year

the_pink_panther_2

As I understand it, yes, it will hamper your chances. You may well get a mortgage, but one with higher interest payments and in that case you'd have to factor in your 'larger' mortgage payments due to your less preferential interest rate. I guess the only way around this I can think of is if it were possible to get the mortgage now only based solely on your wife's earnings... not really sure how that would pan out but to tell you the truth if you are going to have a squeaky clean credit rating in a matter of months it's probably worth holding off.... it all boils down to how desperate you are to move now, but as I say if your decision is a financially motivated one, unless you live in one of few areas of Britain where house prices really are rising significantly, most cost effective I think is to hold off for now.

edinburgher

Thanks for the feedback, worried that might be the case. I realise how big a black mark a default is, but I'm surprised that there isn't any leeway on underwriting taking into account the age of a default.

We don't have to move now, another few months will only give us a better LTV for when the default falls off

the_pink_panther_2

Hi, after writing my earlier post, I read (on MSE site) that rumour is banks are currently being more strict with credit ratings for their mortgage lending. Unfortunately I didn't think of copying the link for you at the time but it was on this site somewhere, may be worth looking, it probably isn't too difficult to find...

GMS

Have a chat with a broker.

How much was the default for?

Don't apply at random to lenders as credit scroe could be harmed with too many searches.

edinburgher

How much was the default for?

I believe it was in the region of £3000. My credit report keeps on getting updated with different, conflicting information and I've not had any luck at getting them to nail down the specifics. It was satisfied in 2010 - as an example, for one month my credit report claims a balance of £999,999 oustanding!

I will be calling a local IFA who claims to offer whole of market mortgage advice tomorrow, if they can't assist I'll maybe try one of the national brokers.

edinburgher

I have spoken to a broker who believes that a 2 year fix in the region of 4.5% initial rate may be available, even allowing for my default.

So it appears there's hope yet...

DVardysShadow

edinburgher wrote: »

I have spoken to a broker who believes that a 2 year fix in the region of 4.5% initial rate may be available, even allowing for my default.

So it appears there's hope yet...

It falls off in June. I would wait.

edinburgher

It falls off in June. I would wait.

The difference between this and the better rates I'd seen was only 0.3% or so. Over 2 years, that's not a difference that concerns me overly.

GMS

Which lender have you been quoted? Have you got a Decision in Principle?