First time buyer mortgage issue with default

EpsilonVaz

Hello,

I have applied for a FTB morgage with Nationwide. It would be under the name of myself and my partner, we have a 10% deposit for a house value of £220k.

Over 6 years ago when I was 18, I took out a loan, a period of time after that I left the country to study and was unable to pay it. It defaulted. I thought it was longer, but apparently according to my credit score it was only 5 years and 1 month ago. So it looks like I have another 11 months to go until it falls off my report.

The default is for £5,500ish. My understanding is that even if I pay that back now, it will still not effect my scoring because of the time it was since the default.

Our combined income is above £75k, so we are not borrowing at our limits. The rest of the credit score is fine.

What are my options here? If this mortgage goes down as a refusal, will this adversely effect my future mortgage applications even if this has dropped off my credit file? Are Nationwide going to refuse me?

Thanks in advance.

Thrugelmir

A total default will have an extremely negative impact on your credit record from the Nationwide's perspective. Mortgage applications are declined on far less.

Was a CCJ lodged against you in your absence?

EpsilonVaz

Thrugelmir wrote: »

A total default will have an extremely negative impact on your credit record from the Nationwide's perspective. Mortgage applications are declined on far less.

Was a CCJ lodged against you in your absence?

Thank you for taking the time to reply, no CCJ was lodged.

jozeffo

There is a lender who I think will look at unsatisfied defaults but not sure about 10% deposit.

If you do buy a place, you run the risk that they will choose at that point to collect their debt and potentially gain a second charge on the property. You might want to think about writing to the lender and offering to settle for a reduced fee before you try and buy a house.

ACG

£5500 default unsatisfied wont help your cause for a mortgage...especially with a 10% deposit. Effectively about a quarter of your deposit is owed to another company.

You owe the money, you have the money - pay it back! Can i borrow £5k off you and never pay it back because you will forget about it in 6 years time?

Thrugelmir

Although the default will drop off your credit record. As you moved away (without presumably) supplying a forwarding address. The creditor is still entitled to chase the debt, as the Statute of Limitations does not apply. So do not assume that the debt has been written off.

Angry_Bear

That's not quite right. The statute of limitations DOES apply, but of course the creditor would have been able to get a CCJ at the last known address (and may have).

Of course the creditor can still pursure the money, but after 6 years with no "acknowledgment" they can no longer pursue it through the courts.

The debt is never "written off" in England, but becomes legally uenforceable when Statute Barred. (Different in Scotland)

That's not to say that it shouldn't be paid, morally speaking, no matter how long it's been.

Thrugelmir

Angry_Bear wrote: »

That's not quite right. The statute of limitations DOES apply, but of course the creditor would have been able to get a CCJ at the last known address (and may have).

Of course the creditor can still pursure the money, but after 6 years with no "acknowledgment" they can no longer pursue it through the courts.

Application can be made to the court by the creditor. Given the circumstances.

McKneff

If you are on a combined income of £75k why on earth dont you pay the debt off.

Contact them and see if they will accept a full and final offer to clear it.

DVardysShadow

McKneff wrote: »

If you are on a combined income of £75k why on earth dont you pay the debt off.

Contact them and see if they will accept a full and final offer to clear it.

If it were me, I would not jump to clear it.

The first thing to check is whether it actually is Statute Barred. Given that the default only has 11 months to run, it really is worth checking whether the default should even be on the record. DebtFree Wannabes have the best expertise on this - but as I understand it,

• a debt becomes Statute Barred 6 years after it was last acknowledged in writing or a payment was made
• A default can only be applied within a period [6 months?] after the last payment - and a default notice must be issued

If there is any possibility that the debt should not actually be on the credit record for the full 11 months this should be followed up first. If OP paid it, without addressing this point, the debt might remain on the credit record [albeit as settled] for the rest of the 11 months, necessitating trying to get the creditor to cooperate after having given them the money - at which point they are not likely to be very interested or motivated..

As the amount owed is substantial an attempt should be made to get the creditor to remove the entry from the credit record as part of the settlement

Thrugelmir

DVardysShadow wrote: »

As the amount owed is substantial an attempt should be made to get the creditor to remove the entry from the credit record as part of the settlement

The creditor could merely maintain the account as being in default. Certainly doesn't have to play ball.