Getting a Mortgage. . .

LollyLou_2

Hi,

My boyfriend and I are looking to buy a house together in the early part of 2008. My worry is that I have a default on my credit file from a personal loan. I have just paid this off this month but the default was for a very high amount (approx £7K) The default is dated July 2004.

I used to be quite bad with my money (late payments here and there) but these have been totally under control now for some time (approx 3.5 years) and I have also cleared a couple of debts. The other good news is that my boyfriend has an extremely well paid job and he has offered to pay off a number of my remaining debts ( 2 credit cards) so that when we come to apply for a mortgage, we will be debt free.

How likely is it that I will be accepted for a mortgage? I will ensure that my credit file shows that the defaulted account is shown as settled but I know that it still doesn't look good. I'm really worried - can anyone offer any advice on any steps to ensure I have the best possible chance of being accepted? We are planning on putting down quite a large deposit so I hope this will help. . . .

Any advice is very welcome - THANKS ALL!

UK007BullDog

As long as the defaulted stuff has been settled and is more than 18 months ago you should be OK.

There are lenders now that will lend people with defaults but they are very expensive and have high rates. If you are unsure grab boyfriend, your respective credit records and pop down to your local broker for some advice and just to round it up visit also another one to get the full picture. Also speak to your bank you are both with.

LollyLou_2

Thanks UK007Bulldog!

Just a couple of queries on your reply. When you say 18 months, do you mean I could only apply for a mortage 18 months from the moment I settled the default account? i.e. I paid my final instalment on this on the 25th Feb 2007, so I will have to wait 18 months from that date before I should apply for a mortgage? Or do you mean the default occured over 18 months ago, which if so, I think I would be ok as the default happend in July 2004.

On the joint bank account, we are just about to add me to my boyfriends account. IS this important when applying for a mortgage to have a joint account? How long should the joint account be up and running ideally?

Finally, how far back to mortgage lenders generally look in your credit history? Is there a set period of time or does it vary lender to lender??

Thanks once again, all responses VERY WELCOME!!!:o

herbiesjp

A lot of lenders will look back at when the default was first registered. Some will look back at when it was satisified

You should be able to apply now - what rates will be available will depend on the lenders you apply to and how they view the default and the reason for the default.

A joint bank account is not necessary, and so there is no minimum timescale that this would need to be running for.

Each lender has a different internal credit scoring system - and they all have different variables as to what they consider important. As such they will all look back different amounts. One lender may look back 3 years, another 6 years. No set standard I'm afraid

Best bet is to discuss everything in detail with a whole of market mortgage adviser

HTH

Mr_helpful

Its likely you will be ok with one or two high st lenders but you say boyfriend is very well paid so do you need your income to be taken into account. But as everyone else says discuss with independent mortgage adviser and preferably one who is willing not to charge you any fees

LollyLou_2

Thanks everyone. Advice really appreciated. When we reach the point when we are ready to look for a mortgage, our plan is to contact an independant advisor so we have sight of all the options available to us.

With regards to my credit file, I guess I just continue as I am doing, making monthly payments (always more than the minimum payment of course!!) and ensure that my credit file is always kept up to date.

Just one last question (sorry!) I'm assuming that its ALWAYS best to apply for a mortgage with little or no debts, regardless of the lender??

Mr_helpful

its better to, but its not the end of the world if you have some debt

herbiesjp

debts reduce the amount you can borrow, but if you have enough income to cover debts and mortgage you should be fine

LollyLou_2

Just referring back to the comment from Mr Helpful re my BF's salary. Yes, he does earn an extremely good salary but I also don't do too badly. His is approx £150K and mine is approx £45K. I think it would be silly to leave me out of the mortgage as this could affect the amount we are entitled to borrow. . .

Mr_helpful

you should just manage a 1 bed flat in a not to rough bit of middlesborough then LOL

toonfish

Mr_helpful wrote:

you should just manage a 1 bed flat in a not to rough bit of middlesborough then LOL

go for a slight income stretch and they'll be able to buy Middlesbrough