First time buyer - worried about credit history.

acquabloo

Hello there.
I know this is a regular post, I've read through loads myself. Was just looking for some advice really.

OH and I are looking to buy our first property together. We have approximately a 10% deposit and looking at borrowing between 90k and 110k.
We went to HSBC where we were given an agreement in principle and spoke to Natwest (who I bank with) and asked for an agreement in principle from them. We were declined by Natwest at the credit check stage of the AIP. My OH's credit history is perfect, however I have an old default on my Experian credit report from 2008, a credit card bill (£500) with Natwest which was paid off in 2008. My credit score is deemed to be excellent on there, however I know not to read too much into this. Looking at Equifax, I have the same default on there plus two from mobile phone companies (2007 and 2008) which have both been settled, both for very small amounts. A victim of changing address and not realising I supposedly owed money on closed accounts there I'm afraid. My score is deemed to be fair there.

I called HSBC and asked the likelihood of a full application being rejected seeing as though we passed the credit check at AIP stage. The adviser informed me that it was "unlikely" and rejections are usually down to not being deemed to be able to afford payments etc. From what I have read about HSBC, this doesn't fill me with confidence. She told me it was best to proceed with the application and see what happens - however, I'm not entirely sure I agree.

We have a combined income of about £38500 between us and low outgoings. I was wondering if anyone could suggest what the next step might be? I have considered speaking to London and Country. Any other advice? Should we perhaps take a chance and proceed with HSBC?

Many thanks in advance.

Dave_Ham

Unfortunately Natwest was the worst place for an application (considering the default was with them) and the 2nd worst would be HSBC.

You are right to be nervous and would suggest a more flexible lender or a broker.

You are doing the right thing reading and checking your credif files, but I would suggest reading a bit more on here and you will probably ascertain yourself who the more flexible lenders are - or as I said get on the phone to a broker.

Good luck - proceed with caution on the HSBC mortgage application.

acquabloo

Thank you for your quick response. Yes, agree that Natwest was a bad move and after reading about HSBC, I feel this would also not do us much good.

Virtually everyone I know seems to have a mortgage with Halifax, which leads me to believe they must be more flexible. However, I think speaking to a broker might help us out. In your opinion, do you feel I'm wasting my time even pursuing a mortgage?

Conrad

acquabloo wrote: »

I have considered speaking to London and Country.

They do not deal with direct only lenders and as such will miss out a large part of the market.

It will all come down to a lenders credit score firstly, and then secondly the underwriters view on your history.

I think you have a chance but it's impossible to say without your actually applying. You might want to try Halifax - if you go direct, at least ofter to buy thier insurace - keeps em sweeter (yes I know this for sure, a relative of mine is high up there.)

acquabloo

Thank you - that's most helpful. From what I have read/heard Halifax seem a good option.

I don't think I have ever spent so much time looking into something as I have with this - its taking over my life!

Dave_Ham

Good for you - it is the biggest financial decision you are likely to make after all.

Halifax is one option, although with a 10% deposit their rates do start with a 6% and technically they should decline you with a default.

Whether they do though...

Seek out an independent broker as Conrad said, at least then you know every avenue has been explored and you will need to pay them but in this scenario would expect them to save you more than they cost you looking at the 90% rates....

Conrad

Hey Dave I find they tend to be a little more lenient than Abbey / N Rock / Woolwich / Nationwide / Accord / RBS / N West and so on.

There is word going around that lenders now realy do not want high ltv business as Basel 111 rules will mean they have to have better balance sheets. Indeed many Banks have been fireselling thier stocks of high ltv mortgages in the last few weeks.

I had 2 75% purchase clients just declined by the main lenders as they have smallish default in last 2 years.

acquabloo

Thank you, I will take both your advice and speak to a broker. Very frustrating with my partner having a great credit history, I feel like I'm letting him down due to circumstances in the past. Hey ho, we live and learn I guess.

Thanks again for your advice.

acquabloo

Sorry another question - mortgage brokers are new to me! How do I find one? I think it's a good idea to see one face to face. I googled them in our local town and found one who states on their website:

"[FONT=Verdana, Arial, Helvetica, sans-serif]Usually there is no fee, we will be paid by commission from the lender, but, as ******** is an independent mortgage firm, we offer the facility for clients to pay a fee in place of receiving commission from the lender."

They then list their costs if choosing to pay a fee, I don't quite understand this. Could just be me being stupid....!



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harvey115

It simply means, if you ask them to search the market as an independent consultant. They would do so without thinking about their commission as you would pay them from your pocket. If their is any commission available from the lender that would be given to you instead in this instance.

Otherwise they would only search for deals that give them some sort of commission.

Hope this helps.

grey_gym_sock

the commissions paid by lenders are mostly about 0.3% of the mortgage value, so you can compare that with what the broker would charge for independent advice.

you should get better advice when it's independent, because then they can select mortgages which don't pay any commission to brokers.