Lloyds Lend a hand and credit ratings

Delboy85

Hi All

First time poster needing a little advice.

I am looking to buy a house with my girlfriend through Lloyd's lend a hand. We have the required 5% deposit and my family have the additional 20% for security. The house we are looking to buy is circa £285k.

My credit rating is described as fair on Experian and is fully up to date. I have two defaults dating back to Jan 2007 and Jan 2009. They are both for less than £200 each (old phone contracts). I have not missed a credit card repayment for well over a year with only 25% of balance being used. The two defaults are my only two negative factors.

My girlfriends credit report is described as poor. She has consolidated loan repayments with a default (£100 per month lasting another 2 years) and 2 credit cards with high balances (nearing £2k max on both).

The good news is I earn £40k basic and roughly an extra £30k in steady (but not guaranteed) commission. She earns £24k. We can prove that we can afford the mortgage (as our rent is as easily as high as our rent) with a significant surplus of money. Paying off the CC's first and then re-saving our deposit is not really an option (unless unavoidable) due to family commitments!

MY QUESTION: Does anyone have any idea how Lloyds would view our credit situation (given the 20% help from my parents) ?

Thank you in advance

opinions4u

Don't get your hopes up.

Multiple and recent credit issues doesn't look good to any lender.

A high reliance on commission is also less favorable.

Thrugelmir

Delboy85 wrote: »

The good news is I earn £40k basic and roughly an extra £30k in steady (but not guaranteed) commission. She earns £24k. We can prove that we can afford the mortgage (as our rent is as easily as high as our rent) with a significant surplus of money. Paying off the CC's first and then re-saving our deposit is not really an option (unless unavoidable) due to family commitments!

Your choice as to priorities in life. If all you can muster from £94k of income per annum is £100 per month on a payment plan. Then don't expect lenders to play ball.

You need to change your mindsets, in the way you approach your personal financial management. Nothing judgemental just factual.

Delboy85

Thanks for both of your feedback.

@Thrugelmir - it is not all we can muster its just we have been focusing on saving £15k for deposit. Would you suggest paying the loan and CC's outright or just doubling/trebling the monthly payments?

BoGoF

From a lender's point of view you have between you (potential) earnings of £94k but also have managed to obtain defaults - that is not a good sign.

I think you need to have a proper examination of where your money is going every month. You should have been able to clear those debts a long time ago.

Thrugelmir

Delboy85 wrote: »

@Thrugelmir - it is not all we can muster its just we have been focusing on saving £15k for deposit. Would you suggest paying the loan and CC's outright or just doubling/trebling the monthly payments?

In light of your current record. Personally I would go for clearing the debts. The defaults will remain on your partners record for 6 years after final settlement. So the sooner they are cleared the sooner the clock will start counting down.

A clear credit record will demonstrate a changed attitude. These situations are totally repairable so don't despair if you meet rejection initially.

Delboy85

So my concern has reached critical now!
Naively I had thought that because the deposit was effectively 25%, I had a decent income and that I had been paying rent of a similar value for the past 3 years to the proposed mortgage that would be enough.
I didn't consider our debts as a big problem (just wasteful).
I will take a trip to an accountant/mortgage advisor and get their opinion.
I will also retry to get my defaults removed from the 2 phone companies.

@Thrugelmir - a clear credit record may take me another 3 years to bump off my last default and my partner 4 years. I cant wait that long just to buy a house :-(. If we paid off all of our debt how long would you guesstimate it would take for the lender to be satisfied?

BoGoF

Unless the defaults registered in respect of the phone contracts are incorrect you will not get them removed.

As you are finding out there's more to getting a mortgage than saying I have a deposit and the repayments are the same as the rent I'm paying. The question which remains unanswered is how did you manage to get into debt on such a decent salary?

How do you spend £94k a year?

Delboy85

My salary has gone up in 3 chunks of £5k over the past 12 months. My commission has only been at £30k for the last 12 -18 months. I pay cicra £500 a month on student loan, pension, car, rent etc etc. I dont feel well off and I really dont consider myself someone who goes out a lot spending money. I have always taken the attitude that I will just earn more money but this is obviously where that plan comes unstuck - must rethink.

BoGoF

What's your take home pay on average?

opinions4u

Delboy85 wrote: »

Naively I had thought that because the deposit was effectively 25%, I had a decent income and that I had been paying rent of a similar value for the past 3 years to the proposed mortgage that would be enough.

The thing the lender needs to look at is that while it's effectively a 75% LTV for the first 42 months, after that time the 20% from your parents is returned. So if the bank repossesses after this stage and the property value is unchanged it becomes a high risk 95% loan.

If property values drop in that time it becomes a negative equity problem. For you and the bank.

I didn't consider our debts as a big problem (just wasteful).
I will take a trip to an accountant/mortgage advisor and get their opinion.

Why an accountant?