10% deposit but with a 2 year old default...chances of getting a mortgage?

3pumpkin3

What it says on the tin really. My partner and I have saved £16000 and looking for houses in the region of £135000-159000. The problem is I have a default on my credit file from tmobile listed (and settled) in dec 2009. I won't go into the ins and outs of it but have tried and failed to have the default removed (was unaware the account was still active, despite having another account with them for 7 years). Apart from this I have a good credit history as does my other half. We have no debts and no loans/HP with approx £50000 joint income p/a.
I know that banks are cautious to lend at the moment, so really I'm wondering what our chances are of securing a mortgage with mainstream lenders in the current climate with our current circumstances?

Any advice would be greatly received.

Michelle

Dave_Ham

Hi Michelle,

You would have an average chance of success as put, how much was the default for?

This is increased with a decent broker and I would potentially rate as good.

Have you had any credit since this default? even if just a credit card with balance cleared each month..

Additionally, worthwhile to obtain Experian and Equifax credit reports for you both as you just never know if anything else has been sneaked onto them and better to know in advance...

3pumpkin3

Hi Dave thanks for such a quick response. It was originally £114 but went to a collections agency so ended up £248. I took out c/c with capital one and vanquis since to rebuild my credit which i pay in full and have monthly access to my equifax credit report...despite doing everything right my overall 'score' hasn't changed in 2 years-bit disheartening! I have requested a limit decrease in a longstanding credit card as thought having too much available credit might be impacting negatively, but not seen any positive impact at the moment.

Dave_Ham

Sounds a bit unusual as should have seen an increase..

That said, have a look at your experian record also...

Good news re vanquis cards as this is the way to improve score and demonstrate sense with ability to manage debts.

Find a decent broker, ideally recommended with access to the whole market and you should be fine....


Dave

ACG

Dave is more experienced than i am so he would have a better idea then myself, however i personally wouldnt be hopeful of getting you a mortgage without a good 15% or even 20% deposit.

The lenders i know of only deal with brokers so i would suggest you at the very least speak with a broker, as i dont think you would get a high street lender prepared to offer you a mortgage (although i could be wrong).

My opinion is that you need a higher deposit or a lower purchase price (or a combination of the 2), however as ive said Dave is more experienced than me (ive only been advising for 6 months) so i could very well be wrong.

3pumpkin3

Thanks both. Yes Dave I don't really get it, there's definitely nothing else untoward on my report so is baffling. Will try experian. I don't want to go through the motions of applying for a mortgage to get rejected and further impact on my credit, particularly if it's for the sake of waiting 6 more months and having an extra 5% deposit. We've just waited a long time to get on the housing market (prioritised travelling) so have itchy feet to own our own home. Suppose will just need to approach a whole market broker and take from there. Thanks again

3pumpkin3

Dave, just thought you might like to know. Just accessed experian and says that my credit rating is 'good'. I know that your expertise is not with credit reports but any idea why experian and equifax can be so different???

Dave_Ham

Credit reports and mortgage broking go hand in hand these days so don't worry..

They both share and report in different ways and share with different organisations..

The actual score does not matter hugely as each lender has different criteria it assesses on. Some use Experian, some use Equifax and some use a combination.

This is good news and again the reason why I said to present this to a decent broker as they will be able to optimise your chances of success..

3pumpkin3

Thank you again. Well I feel a wee bit more optimistic

Thrugelmir

3pumpkin3 wrote: »

Dave, just thought you might like to know. Just accessed experian and says that my credit rating is 'good'. I know that your expertise is not with credit reports but any idea why experian and equifax can be so different???

Lenders don't refer to the same reports that consumers do. In essence they take the data that the agencies collect and apply their own "credit scoring" process. Each lender will score differently. Scoring will also be changed depending on other factors, all of which are unrelated to as an individual.

Cancelling a card you have no need of, will boost your rating slightly.