Will I get a mortgage

neil_999

Hi there,

A bit of background first...I am 25, in full time employment (although have only been in this job for 9months) and earn £19,000. My wife is 28 and a house wife who brings in around £7,300 in tax credits etc as we have two young children.

My wife has an Experian score of 701, though no defaults or anything like that. Now the problem comes with me, I have 2 defaults. They were settled in Apr 2010 and also quite a few missed payments from about the same time. My Experian score was 510, in Feb 2012 - since that check I have worked on improving it, with opening a few credit cards and running them properly.

We also have two loans with our bank (Lloyds TSB) which we are going to pay off in full before we apply - I assume this will help? It will mean we have no outgoings other than standard bills.

Another bit of info that might be useful is that in Oct 2011 we were given a mortgage in principal, but then declined at the formal application. However, we were told the reason for this was we had too many credit searches.

Lastly, we are looking for houses at £50,000 and have a £5,000 (10%) deposit.


So my question is, with the above in mind, do you think we stand a chance? Any advice would be gratefully accepted. Also are "bad credit mortgages" worth a look at?

And my very last question, I know a mortgage in principal is by no means a certainty you'll get it, because of surveys etc, but surely it means you should pass their credit checks? Unless something drastic changes.


Thanks.

Thrugelmir

Clear your loans.

Close any unnecessary credit cards. Do you need more than one?

Increase your deposit.

You'll be fine. Over time your credit rating will improve.

kingstreet

Which lender did the AIP pass/full app fail?

I'll hazard a guess at Halifax.

You'll struggle to get a 90% mortgage with two recent defaults, settled or otherwise. What was the date of registration and how much were they? The settlement date is not really important.

neil_999

The dates the accounts defaulted were both Apr 2009. One was for £80, the other £1000.

Your right, it was Halifax! Am I right in thinking this isn't normal? Surely if you pass the credit check to get an AIP, it should mean you'll be ok on the full app. Obviously assuming nothing changes on your credit file.

I've managed to get my credit report now and Experian shows a score of 731 for myself and 701 for my wife.

Thrugelmir

neil_999 wrote: »

Surely if you pass the credit check to get an AIP, it should mean you'll be ok on the full app. Obviously assuming nothing changes on your credit file.

An AIP does not involve a full credit check. The various credit agencies hold different data sets that lenders use. So nothing is guaranteed until a full mortgage application is submitted.

kingstreet

neil_999 wrote: »

The dates the accounts defaulted were both Apr 2009. One was for £80, the other £1000.

Your right, it was Halifax! Am I right in thinking this isn't normal? Surely if you pass the credit check to get an AIP, it should mean you'll be ok on the full app. Obviously assuming nothing changes on your credit file.

I've managed to get my credit report now and Experian shows a score of 731 for myself and 701 for my wife.

Halifax does a soft search at AIP stage, leaving no footprint on your credit file.

This is bad for those with historic adverse credit, particularly at old addresses. This is not picked up until full application, so it's easy to pass an AIP, thinking you're okay, then get a decline when you've found a property, made an offer etc.

neil_999

Ah, thank you. That makes a bit more sense now. Think I will try with our bank first as we already have a good relationship and if that falls through, I'll take a look at sub-prime mortgages...

r748spx

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Dave_Ham

You will not get a sub prime mortgage at 90% LTV.

Before you pay off the loans, obtain your Call Credit, Experian and Equifax statutory £2 credit files and see a broker with them.

C&G are unlikely to want to get involved with defaults on file, although be interested how you get on..

My gut feeling is that depending upon the value of the loans, do not repay and use this money to fund a bigger deposit. This may open up sub prime lending, or at least make you look more attractive to any type of lending.

If your last 12-24 month history is good, a Building Society may be a better solution...

All the best