Mortgage Promise and +6 year old debt

KRJ

Hi, 1st post on here and looking for some advice.

I recently applied for a mortgage in principle through a broker and he managed to obtain a mortgage promise from Bank of Scotland for £196k based on me taking shared equity on a new build and having a 5% deposit. I've since seen a property with 85/15 shared equity split whereby I would need a mortgage for £145-150k depending on my deposit situation - so LTV will be 80-85%.

All good until I got a phone call the day after the mortgage promise from Lowell Financial regarding an old BoS debt which had defaulted and since fell off my record (I got into some difficulty about 6-7 years ago and ended up with a few defaults and have lived credit free since... apart from utility bills, mobile phone contract and 1 recent credit card to rebuild my rating).

My question is whether that is pure coincidence I have been contacted (suspect not), or BoS are now aware of this and a full application likely to be rejected? I've no problem setting up a DD to pay off this debt, however just wonder what BoS' view might be. I have made payments to this debt in last 6 years so know I cannot ignore it.

Any advice appreciated - don't want to waste my time getting my hopes up even though that guarantee looks pretty promising.

Thanks in advance!

kingstreet

Presumably Halifax and BoS share systems and the BoS agreement in principle (AIP) will be about as reliable as that offered by Halifax.

The "soft search" does not pick up historic adverse at other previous addresses, so it's possible to get an AIP and fail at full application stage.

I'd say the chances are higher as you are applying to a lender with which you actually have that historic adverse.

What was the actual date of registration of these defaults as they will fall off your credit file six years from then?

If you have not already done so, order your statutory credit files from all three CRAs so your intermediary can see exactly what the lender will see;-

You need to get hold of all three of your statutory credit files;-

Equifax

https://www.econsumer.equifax.co.uk/...erletter.ehtml

Experian

https://secure.wiseconsumer.uk.exper...x.html?data=00

CallCredit

https://www.callcredit.co.uk/stat-re...pl=regPurchase

Annisele

How much is the debt for? The fact that you say you'll set up a DD for it suggests that you can't afford to clear it in one go - and so some lenders will deduct the amount of your debt from your deposit, and assume your deposit is much smaller.

KRJ

Hi, thanks for responding.

I already have a copy of my credit file and this debt no longer shows on there - it defaulted more than 6 years ago. It's for just under £8k and I guess I just buried my head in the sand a bit and hoped it would go away (wishful thinking I know!) - I basically wasn't being chased for it this last year and thought it might harm my credit report if I started to make regular payments to it - as I said above, it was one of many defaults (rest of them were all cleared - I was approx 18k in debt at one point!).

I'm now in a much better position financially, Experian score is "excellent" and I'm a lot more responsible - I basically don't want this debt to stop me moving on with my life and have to continue wasting money paying rent. Ideally I wouldn't have went through BoS / Halifax but just happened to turn out that's who the broker came back with.

The deposit situation is basically a loan my girlfriends parents are taking out and I will be paying them back (hence going for less than I was offered as want to keep plenty aside for paying that and this other debt) - so I wouldn't be in a position to give any of that to the bank. My partner won't be going on the mortgage application and I've made sure I can pay everything on my own and not even taken her temp wage into account - that is always going to be an extra and she will of course contribute.

Is best approach to just ask the broker to halt and take no further steps towards a full approval, or is there still a chance of it being approved seen as the debt is with a collector now and not the banks loss anymore? Also, does a "mortgage quotation" on your credit file show up to other lenders and impact my chances of getting an approval elsewhere - they may assume a rejection even though it was only a mortgage in principle?

For now I haven't take any action on the old debt as wasn't sure if that was good or bad thing to do in relation to the mortgage application - I was originally going to challenge and ask for copy of the original agreement but suspect that would only flag this with BoS if it wasn't already. Only reason for doing that btw was because I wanted to be 100% sure the total being quoted was all my debt - for a while I was getting phone calls and texts from same company about a debt in a completely different name than my own (I thought that's perhaps why they stopped harassing me).

Thanks again for any advice - if only I hadn't been so stupid and irresponsible with money when I was younger!

Annisele

KRJ wrote: »

The deposit situation is basically a loan my girlfriends parents are taking out and I will be paying them back

Does your broker know about this? Quite apart from the default issue, borrowing your deposit would scupper your chances with many lenders - so if your broker doesn't know already, tell him asap.

KRJ

Yeah, broker aware of this. I've been told it needs "gifted" to me but obviously we will be paying them back.

Jayjay22

this all sounds very complicated, would you not be better focusing on clearing your debt for a yr or two, then taking on mortgage & deposit loan when you are free from this outstanding £8k?

zzzLazyDaisy

You are borrowing money from your gf's parents for the deposit, but you plan to buy the house in your name alone? That doesn't give her any security, why would they do that?

KRJ

If focusing on the debt and paying it all off is what I need to do then I will of course - my hand is being forced at the moment because an existing tenancy agreement is coming to an end and my flat mate is moving into another property. So I basically don't want to keep throwing money away on rent when that money could go on a mortgage - either way I'm still going to need to pay this old debt off.

They are doing that because I will be covering full payment every month (mortgage and loan) and she will of course be staying with me - few reasons for not putting her name on mortgage at this stage but plan would be to do that within a couple of years.

Broker is due to call me back tonight, so considering asking him if there is an option to try with a different lender, failing that I guess I just say proceed and try my luck and if its a rejection I've no choice but to rent.

Thrugelmir

KRJ wrote: »

I basically wasn't being chased for it this last year and thought it might harm my credit report if I started to make regular payments to it

When were you last contacted or made a payment?

KRJ

Thrugelmir wrote: »

When were you last contacted or made a payment?

Last contact was approx 1 year ago and that's when I was making payment also. Basically what happened was that I had a seperate c/c debt (also over 6 years old so default expired) with BoS which was also with Lowell and I thought that single payment was covering both - that got paid off so money stopped coming out I guess and I never noticed until a few months later... no calls / letters as I said, so took the easy option and just ignored it.