Trying to get a mortgage - need help/advise

butchx5

Sorry about this - its a longish story but feel you need all the facts to be able to advise me .... here goes.

Annual Net Household Income:
PAYE: £5200
Self Employed: substantiated accounts last three years £1850
WTC: £4694
CTC: £5969
Child Benefit: £1752

HSBC Credit Cards:
1 - Balance £6000 - monthly payment - £155
2 - Outstanding £3700 - monthly payment - £90

Credit History:
Clean BUT IVA which has never shown up and was satisfied Dec 2006.

Property:
Standard built 1930's detached 4 bed house. Owned outright - no mortgage, etc Value about £200K

Want an interest only mortgage for £17K to pay off credit cards and carry out home maintenance/improvements desperately needed.

Applied to:
Santander - we bank with them - turned down as outgoings too high as will not take into consideration we WILL pay off credit cards - too many people in past haven't.

Virgin Money - turned down - over-extended as although will take into consideration we will pay off credit cards also took details of household bills and WILL NOT use WTC, CTC, CB so too much outgoing for income.

It is SOOOOOOOOO frustrating we have been paying the credit cards - £240 a month give or take for 3 years without missing. The mortgage would be less than £50 a month.

I haven't tried HSBC (who the CCs are with therefore they could presumably ensure the cards WERE paid off with the advance) as I did try last year and was turned down - can't remember their excuse - although they were willing to pay off the credit cards with a 5 year loan at a similar monthly payment figure to the monthly credit card payments but at least they would be paid off. I didn't take the offer as I was very angry with the situation (how can they be willing to give us a loan but not a mortgage??) and had hoped to be able to resolve the issue elsewhere.

I cannot risk applying elsewhere willy nilly - You give all the information up front, are completely honest and are told 'its worth a try' then get turned down flat. I'm pretty sure Virgin did a credit check, not sure about Santander - don't remember it being mentioned. I really want to sort this out so don't want to build up any more credit checks for useless applications.

Can anyone see a way forward for us??

Helen

Dave_Ham

Hi Helen,

You are correct, do not apply anywhere else and certainly not HSBC.

There are a couple of decent solutions from what you have said, although at this point I would engage a broker.

A decent broker would not have gone near Santander given your details and to be fair, you are likely to require putting £25k as a minimum for a mortgage.

Given the mortgage size, it is more important that you get a fee free product than the actual rate you achieve.

Still, a broker would run through these numbers so you are comfortable.

The IVA will still be a hurdle, so ensure you do tell a broker this. It may not be an issue upfront, but will be at the legals.

All the best - this is achieveable, just placed appropriately.

Thrugelmir

butchx5 wrote: »

Want an interest only mortgage for £17K to pay off credit cards and carry out home maintenance/improvements desperately needed.

Interest only on £17k. Initial reaction would be too small a mortgage to be worth the arrangement costs. Also interest only. This suggests that finances are tight. So consolidating credit card debt into a mortgage more often or not does not resolve the underlying issues.

Suggest you consider other options. Even if their not your preferred route.

butchx5

Hi
Thanks Dave.
Thrugelmir - neither Santander nor Virgin had an arrangement fee and were ok with small amount of loan, etc - hence why I approached them.

I know the minimal amount will mean I cannot apply to all providers.

There are plenty of providers with non arrangement fee options - but would be willing to pay some fees if I considered it worth it.

What's the point of applying for more ££££s if I don't need them and of course I want to reduce my monthly outgoings by as much as poss.

We plan to downsize in about 5 years - our youngest will be 18 and we hope we wont need a 4 bed by then (fingers crossed) so the plan is to pay off the loan then - hence why bother with anything other than an interest only mortgage.

Dave_Ham

You may need to consider taking £25k as a minimum unfortunately, depending upon the detail of your case.

Even if you pay the mortgage off with it after, but a couple of the more flexible lenders do have a £25k minimum.

There are still some challenges though as I said in my original post, a decent broker will make these go away.

I wish you well

Thrugelmir

HSBC's offer of a 5 year loan seemed a reasonable proposal. Unsure why you felt angry at them. Little point in cutting your own nose off to spite your face. Lenders will take a totally approach and have a different attitude to the situation than you are. Times have changed rapidly. Underwriting for credit is much tighter than it used to be. Lenders are increasingly required to act responsibly.

I would suggest approaching HSBC again. At least it guarantees repayment of the debt in a reasonable time frame.

kingstreet

If there's no existing mortgage, it's a remortgage of an unencumbered property and as Dave said, you might need to increase to £25,001 to get out of the Consumer Credit Act regulated loans situation.

You'd simply draw down the funds at completion, then make a lump sum repayment. It does rely on you getting a penalty-free product though.

butchx5

Thanks everyone
Have approached a mortgage broker and will keep you updated as to how things progress.
Helen