Mortgage with adverse credit?

vicxzy

Hi,

Long story short I split with my husband several years ago & we may have just finally sold the house.
We still have our joint mortgage & never missed a repayment.
However since I've been on maternity leave my new partner & I have had to make token repayments to a load of creditors with having to pay rent on our home & mortgage on the ex marital home & we now both have defaults.
We want to try & get a mortgage for about £127000 & both have stable jobs with the local authority.
My income is £25500 & his just over 17k so the amount we need to borrow isnt too overambitious im hoping? We will hopefully have a deposit of around 20-22k.

Is it too much to hope that we could get a mortgage given the defaults?
There's also the possibilty that Northern rock who we are with now for the mortgage might let me take my ex husband off it & add my partner & transfer the mortgage to a new property of similar value? Is that feasible?

Thanks

rising_from_the_ashes

I'm sorry to say but ...... getting a mortgage with defaults is extremely difficult - especially if there are multiple ones and they are recent - which it sounds like they are....

Also NO job is stable atm - especially with a LA!

You can ask for someone to be removed from a joint mortgage with NR - but when I asked there was a fee of around £300 and the sole person left had to go through a mortgage check (which was basically just the same as going through a new application).

If you were also looking to move to a new property, then it would basically have to be a new mortgage application for you & your OH.

Thrugelmir

Will you be able to clear your debts from the sale of the property?

vicxzy

Thank you I feared that may be the case
Genuinely guuted ive never missed a repayment on my mortgage in over 10 years.
I may be able to repay debts if I can negotiate a decent final
settlement with them? Would that make a difference do u think?

Thrugelmir

vicxzy wrote: »

I may be able to repay debts if I can negotiate a decent final
settlement with them? Would that make a difference do u think?

Show as a default if settlement not made in full.

So the debts disappear but your credit record is truly discredited with the lenders concerned. Which will severely impact your ability to obtain a mortgage in the future.

vicxzy

Really? I thought if they accepted a settlement the default was cleared?
Would it be better to go down the IVA route then do you think? sorry for all the questions!

Thrugelmir

A default by definition is non-payment. So if you fail to repay a contractual financial obligation in full you have defaulted.

So for example. Barclays Bank aren't going to write off a Barclaycard debt then bend over backwards to offer a Woolwich mortgage. There's no commercial logic in doing so.

I suggest you make an appointment with your local CAB. Use their expertise to help you come to a plan as to the best way forward.

Sell the property and rent for a while. Whilst you sort yourselves out. Most importantly get your finances in order and learn to budget. Over time your credit rating will improve again. So take a long term view. As it will be worth the trouble in the end.

rising_from_the_ashes

vicxzy wrote: »

Really? I thought if they accepted a settlement the default was cleared?

A default will stay on your file for 6 years from the date it was issued - whether paid or not.

However, it does look better to lenders if they're "settled" rather than "unsettled" or "part settled" - but they will still have an impact on your ability to get new credit.

This will decrease over time but especially with things the way they are just now, it will be harder.

I managed to get a mortgage with one 3 year old default on file - but it was before "the crash".

kingstreet

vicxzy wrote: »

There's also the possibilty that Northern rock who we are with now for the mortgage might let me take my ex husband off it & add my partner & transfer the mortgage to a new property of similar value?

They may allow you to transfer equity to your new partner on the existing mortgage/property when they remove your ex-husband.

However, they will not allow you to transfer a mortgage from one property to another. This is legally impossible. As you sell one property, the mortgage is repaid and a new one starts on a new home. This new mortgage is subject to the usual rules and checks.

Thrugelmir

rising_from_the_ashes wrote: »

A default will stay on your file for 6 years from the date it was issued - whether paid or not.

However, it does look better to lenders if they're "settled" rather than "unsettled" or "part settled" - but they will still have an impact on your ability to get new credit.

The lender you default with can retain a permanent black mark against your record and decline to do business with you in the future.

property.advert

Not to beat around the bush but you are stuffed. Had you remained in the joint property then the other creditors would not have influenced an in place mortgage but your defaults with them, which I presume are current as well, means that the picture are showing to potential lenders is that as of last month you were not able to service your debts. You can forget about anyone giving you a mortgage.

You need to regroup. Get your cash from the settlement and go for full and final after negotiation. You need to make sure they mark it as fully satisfied as well, not partial.

Meanwhile you are saving up for a deposit. Given your history of multiple defaults, you are looking at years away before someone gives you a mortgage and then you are going to need a large deposit and you'll be paying some fairly hefty interest rates.

Your timeline is 6 years from default. Perhaps after 2 or 3 years you can convince someone to give you some mortgage if you have a large enough deposit. Don't sign deals extending out past 6 years though and if you get a mortgage after 2 years, look into remortgaging after another 2 years. Then after a total of 6 years you should be back on standard rates as your record will be clear.