Turned down for mortagage

mummymayjay

We have just been turned down for a mortgage with our existing mortgage company. The reason is a default on our credit file from Lloyds on our current account.

We decided to move our current account to FD from Lloyds in January 2012. We moved all of our SO and DD succesfully and stopped using the Lloyds account at the end of February 2012. We could not close the Lloyds account immedietly as it had a £400 overdraft which we could not pay off until June.

On 15 Mar a card payment was authorised for my sons swimming lessons, this made us overdrawn and incurred in the month after the payment (May) charges of £65 and then the following month (June) charges of £80. As with the overdraft we could not pay the charges at the time, Lloyds agreed to an arrangment to increase the overdraft to cover the charges. We paid the charges and overdraft in full in June.

We have now applied for a re-mortgage with our existing lender Woolwich and have been turned down due to adverse credit on our file. We have our credit file and Lloyds have put a default on our current account for the payment which made us overdrawn.

I have spoken to Lloyds who have advised that because the card had been previously used to make the same payment (the term before for swimming lessons) then the merchant bank authorised the payment as it is classed as a standing payment. Lloyds have advised that they can send a form to the credit file company but it will be rejected as it is not a bank error.

I have requested a final repsonse letter from Lloyds so I can take this to the ombusdman.

Can anyone give any advice please.

kingstreet

Can you explain what you are trying to do? You aren't remortgaging with your existing lender. Are you trying to increase your mortgage borrowing or are you simply looking to change products?

Dave_Ham

Ok, I need to clarify a few things:

Are you trying to remortgage for additional funds or purchase?
On your credit file, what are the markers before default appears. Usually they should be 1 month, 2 month, 3 month then default although not always.

Defaults are serious and typically they would have sent you many letters telling you to get in touch - at what point did they increase overdraft - before or after default date?

Was the bank account joint names, is the mortgage joint names?

Have you checked 1 credit agency or all 3?

Experian Equifax and Call Credit

This will be hard work to get overturned, what is the default value?

Thrugelmir

mummymayjay wrote: »

I have requested a final repsonse letter from Lloyds so I can take this to the ombusdman.

Lloyds is within its rights to issue a default notice. More than likely issued as you have moved your day to day activity away but left the overdraft unsettled.

DVardysShadow

mummymayjay wrote: »

.... Can anyone give any advice please.

Advice? This is not a mortgage problem. It is a credit file problem.

The residents here are for the most part mortgage brokers - who will do their best to suggest how to present a mortgage application with your particular issue. But to actually deal with whether Lloyds were justified in slapping a default on you, go to the DebtFree Wannabe forum and ask there. They know the ins and outs of Credit Referencing - and how to deal with it if the default was not correctly applied.

mummymayjay

Thanks, I have posted this on debtfreewannabe also.

In answer to the questions.

This is for additional borrowing (for an extension).
On the credit file the previous markers are 0 in green.
Both the bank account and mortgage are in joint names although the mortgage is just based on my husbands salary.
We have just checked Equifax as this is the only one Woolwich use.

Thanks for the replies.

Dave_Ham

May be worth checking Experian also, may provide an opportunity unless you are tied in with Woolwich or on an attractive SVR.

All the best...