Joint Mortgage, One Bad Credit. Help needed

wallet_holes

I am completely new to this and may waffle on a bit but please bear with me.

My wife and I are looking to buy a place of our own having rented now for over 12years and expecting another baby and our two bed flat will no longer accomodate us as from October this year.

We both earn well and have sustained our jobs/careers progressively well over the years. This site and others have helped greatly in bringing our monies, outgoings into check.

The problem is that just before the birth of our first child who is now almost 7yrs old, my wife was not working full time and I went into the Credit Card and Overdraft market and borrowed up to £15,000 over a crazy three year period. Missed payments, more missed payments complete defaults etc has weakened my credit score to a pitiful 'Poor' My wife however now has a decent score. I have since paid off most the debts and overdrafts save for £4,000 which I am currently chalking off from one card. I have until November 2013 for the 6 years from date of last default to come off my record. I have been very lukewarm about it but I can't ignore it any longer.

My wife and I currently have about £10,000 as a deposit and another £13,000 but my fear is that we will be rejected because of my poor credit history even though I have not had an overdraftm fallen behind in payments or missed a single payment in the last 4 years or the years before that.

Is there someone in this forum or who knows someone who may have gone through or is going through a similar situation?

This has made me very worrisome.

Any advice will be appreciated.

GMS

There are lenders who will consider historical adverse credit.

What Loan to Value are you looking at?

Have you got copies of your credit reports to see exactly what is showing?

Dave_Ham

Hi there,

It sounds as though you are doing the right things and looking towards the future.

A lot will depend upon your geographic location, as if local to you houses are £100k then your deposit etc. sound reasonable enough to mitigate old, historical debt as GMS says.

That said, if you are in or near a City and looking to raise £200k+ with that sort of deposit for a house it will be a lot harder, although not impossible.

Nailing the last credit card will make a big difference whatever route you go down.

If you provide more details, may be able to a bit more specific and as GMS says, get those Credit reports. does not matter what they look like, easier to deal with fact and move on

wallet_holes

We actually live in London and currently in an area where 3 bedroom homes average at £220,000. We have began looking to areas within the Home Counties, 25miles out which though would incur an extrea £3000 in yearly transport costs into Central London where I currently work, 3 bedroom houses in the areas we are looking at are looking good at between £140,000 to £175,000. When we did a quick Mortgage Lend with the the Halifax Online calculator, it revealed, based on the figures we submitted, that a possible loan up to £192,000 was possible but that would mean saving even more and commiting even more in repayments. We are very comfortable with a home within the £140k to £170k range which we can easily afford, all bills inclusive. I did have a look at my Credit Report this time last year via the Experian website and wrote to every single debtor with whom I had settled.

Some replied stressing that though the full payments were later received and paid in full in '06, '07...... they were obliged to keep the records until the date from first default had lapsed. The last, I think, should be Nov 13. It really worries me. I will revist the Credit Reports yet again this March and as before, attempt yet another repair. My wife also currently has no debt, bar an overdraft which is healthy and a Credit Card from which we borrowed £2000 last October and which we have paid off, save for £197 as of time of writing. Its just that 3 years of acute madness and desperation that has continued to linger on.

I have also found that certain places which offer mortgages to borrowers with an adverse history usually offer much higher percentages as well.

We are currently looking at an 86% LTV on the back of what we currently have but will be willing to speak to lenders who will accept up to 95%LTV.

Dave_Ham

Thanks for the additional information, it sounds as if you have already worked towards moving away from London yourselves based upon cost.

Have you considered looking at some "shared ownership" schemes as you are not totally hell bent on being in one town etc.

The local authority or builder or both contribute and retain an ownership in the property. Quite often this will open you up to a better ltv, although you will pay rent on the remaining %

Alternatively, rule of thumb is that as your ltv gets higher (certainly at 95%) the rates are higher and the lender is more selective and restrictive on income multiples

Keep doing what you have done on your credit reports, this will remain crucial...

wallet_holes

Thanks Guys. You have been helpful thus far.

The Mrs and I will probably go into a bank this weekend for the first time ever and begin by making enquiries.

What is the least and most likely outcome from a lender considering my credit history? In an act of desperation, would it make any difference were I to go into this consult with sheet after sheet of bank statements and other bills and payment receipts going back 4 years which shows that my expenditure: incoming and outgoing has been without a hitch?

Hannah195

Hi,

My boyfriend and I are going through a similar circumstance at the moment and are really struggling to find a mortgage. He has an excellent credit file and I have one small mobile phone default from a few years ago. I am still in the 'very good' credit category, have no debt and can easily afford mortgage repayments, but banks don't seem to care.
I am not a mortgage advisor but from our experience so far you can pretty much rule out high street banks (HSBC, Barclays, Halifax...etc) as you will be automatically declined if there is a default on your credit file (sadly, even if you can prove financial stability now). Don't apply for these banks as when you get declined it will knock your credit rating again! Some building societies and smaller banks are willing to lend but they want a higher deposit and charge higher interest rates. They are unlikely to offer 95% LTV. I don't want to sound negative but this is what we've recently experienced.
I'm sure there are, and hope there are, more options available as there are so many people in this situation at the moment. Something has to change soon or the housing market will remain static for years!
I wish you the best of luck as I know how stressful it is! We have already lost one house because of this.

All the best,

Hannah.

Dave_Ham

Hi,

You will pretty much get the same response from most on here, if you have previous bad credit or any case that is not straightforward then you are best to use a broker.

It is much easier to look across the marketplace and after precluding the lenders that the client does not fit the criteria for approach an appropriate lender rather than the time and heartache and damage to credit score that multiple credit score fails bring with it...

Taking down evidence of current good behaviour may seem like commonsense, but most of the mortgage advisors in these banks will quickly credit score you and then even quicker to get you out of the room if ou fail. Its a numbers game for them unfortunately, especially on a Saturday which is a premium day and reduced hours in most cases.

Thrugelmir

Dave_Ham wrote: »

Taking down evidence of current good behaviour may seem like commonsense,

People fall into distinct camps depending on their attitude to risk. So the algorithms that the major lenders use to evaluate the credit profile of potential borrowers has a proven statistical base. Whilst the system may not be perfect its the easiest way of processing high volumes of applications, and reducing the risk to the lender.