Joint Mortgage - Partner with bad credit

rajanm

Hi all,

I recently got engaged - my fiancee and I would like to start saving up for a deposit soon after we get married next April.

We earn pretty decent salaries - I'm on £37,000 a year and she's on £47,000 a year. I already own my own property near Central London and have a £126,000 mortgage which I'm overpaying at the moment. My credit record is pretty much perfect according to reports I've looked at online.

It all sounds great so far but my partner's credit rating is pretty much the opposite. She has 2 credit cards and a loan totalling around £14000 - she also drifts into her authorised overdraft and is currently £-300 in her balance. She also has a student loan but this has been deducted from her salary automatically over the last few years.

It's only since she moved in with me a couple of months ago that we've started to tackle her debts - she's paying everything off now with a view to being completely debt free (save for the student loan) by the time we get married. The problem is her credit record is pretty awful (1 out of 5 on noddle.com) and before we sorted out her finances she had defaulted on a couple of loan payments.

We'd be hoping to start looking at a joint mortgage towards the end of next year/beginning of 2014. We have just under 2 years to get her finances in order, sort her credit rating and save for a deposit. I'm glad I got her to start paying off her debts now rather than wait - she still likes her luxuries and, as much as I feel bad for doing it, I'm trying to get her to live in the real world and cut her spending.


The question is, how much is her bad credit going to affect our chances of getting a mortgage in a couple of years time? She's hoping to get a pay-rise in a few months which could take her up to £52,000 a year but with these blemishes on her credit record will it make any difference? How do we get her credit rating back up in the fastest time? I'm planning to get her a credit card when her debts are paid off and spend some money and pay it off straight away each month for at least a year - will this be enough?

It's unlikely we're going to get a decent mortgage based on just my salary alone especially as I want to keep my current flat and rent it out...the only solution is to sort out my fiancee's credit record.

Any help would be greatly appreciated!

Rajan

Dave_Ham

Hi Rajan,

You are doing the right things, once clear she will need a specialist credit repair card like Capital One or Vanquis. Giving her a card on your credit card will make no difference at all..

When were the defaults registered, I mean exact date - checkwith Experian or Equifax..

Also, get a broker as they can optimise chances and success..


Good luck

Thrugelmir

Ultimately its down to an individuals mindset. As the only way is to make sacrifices and pay down debt as quickly as possible. Then time will heal the credit record faster.

There's no benefit in clearing debt only to obtain another credit card later. It proves nothing to a lender. Other than the individual could go and binge again at any time they wished. A lender needs to see a change of attitude, that lessons from mistakes of the past have been learnt.

How you spend your money is your business.

How a lender views the way you spend (or save) your money is their business.

So decide what your priorities are.

rajanm

The defaults were actually from January and February! God knows how many there were before that ...it's taken a while to get her to realise the impact of her spending but she's now taken steps to sort her debt and has cut up one of her cards and given the other to me. She's not paying me any rent so she can use the majority of her salary to pay off her debts and she's set up monthly direct debits to pay them all off. The saving grace is that she's doing really well in her job and her pay should be going up sooner rather than later...

Thrugelmir - the only reason for getting a new credit card for her is to repair her credit history. She'd spend a nominal amount each month for a year or two and pay it off straight away (once she's cleared all her debts) - we'd basically use it as a device to repair her credit rating.

Thrugelmir

rajanm wrote: »

Thrugelmir - the only reason for getting a new credit card for her is to repair her credit history. She'd spend a nominal amount each month for a year or two and pay it off straight away (once she's cleared all her debts) - we'd basically use it as a device to repair her credit rating.

Doesn't prove anything I'm afraid to say. Statistically someone that handles that finances poorly is highly likely to do so again in the future (if the circumstances arise). People do fall into distinct camps between savers and spenders , its all down to human nature

If you wish to impress a lender. Save with them. Demonstrate an ability to save regularly. Far more likely to score points. Particularly with a smaller lender such a regional building society where underwriting has more human flexibility than a computer says no one.