Mortgage under one spouse's name only?

upstaged

My husband and I are looking to buy a house, but I have a poor credit history.

I have a recent CCJ on my credit file. The CCJ was - in my opinion - unfair, as the company in question had been sending mail to an old address even though I had informed them that I no longer lived there. However, after spending considerable time trying to find out if I could get the CCJ set aside it doesn't seem that this will be possible. To avoid further complications I just paid off the CCJ in installments; the last payment was in June so it's now satisfied but is less than 12 months old (I know that it stays on my record for 6 years but can be less detrimental after a year).

My question though is: can we get a mortgage in just my husband's name? He is the higher wage earner, and we don't want to borrow a huge amount. I can provide a very good sized deposit which equates to 20% of the value of properties we're looking at. He has provisionally spoken to a mortgage advisor who said that on his income alone we can easily get the amount we need at a reasonable rate, because of the size of deposit. But we're getting very conflicting advice - some people have said that the mortgage underwriter will still credit check us both even if the mortgage is solely in his name, and that mine having a poor credit score will therefore lead to rejection. The mortgage advisor said that the only way to know for sure is to go ahead with the credit check, but we're really worried that a rejection would adversely affect his credit - something we're desperately trying to avoid (we're keeping all our accounts separate). Just to note, we've run an Experian check on him and his credit file is fine.

Does anybody know if my bad credit is likely to affect a mortgage application which is under his name only? I would really appreciate any advice.

Thrugelmir

You say that you are keeping your accounts separate. However you are providing the deposit. Suggests that you and your husband are in fact interlinked still. As the source of the deposit will be verified during the purchase process.

kingstreet

YOU are not credit checked if YOU aren't party to the mortgage application. In addition, there is no record of a mortgage application being rejected, just the search which remains on file for upto 12 months.

Some lenders, Abbey/Santander being one, will not accept a person providing the deposit who will not be named on the mortgage but will be living in the property.

Remember, you can't be party to the ownership of the property if you aren't party to the mortgage.

upstaged

Thanks for your reply. I didn't know that the source of the deposit would be looked at in the purchase process. Does this mean that, yes, my bad credit will affect the decision? Is there a way around this? We were aware that there would be a potential issue that I'm providing the deposit but the lender may require the deeds to be in his name only (if the mortgage is in his name only), but we thought this would be an issue between ourselves (i.e. in the unlikely event that we divorce in future, he would technically own the house even though I had paid the deposit) and did not know that it could also present a problem in getting the mortgage.

kingstreet

As I said, if you are not party to the mortgage you will not be credit checked. Your situation will only impact him if you have any joint accounts or any other associations on his credit file.

Some lenders would have an issue with you paying the deposit when you will be living in the property, but not named on the mortgage.

Ensure your adviser understands the situation and places your case with a lender which will accept this.

upstaged

Great, thanks.

It sounds like the best course is to speak to a broker (at the moment we've just spoken to one mortgage advisor through a building society because it's a friend of a friend) and ask them to take this into account when looking at lenders. If this isn't an issue with all lenders then that's great and hopefully we can sort something out

By the way we do have a joint savings account (which we opened before we realised the issues related to my credit file) but as far as I understand, savings accounts are not linked to credit files. We have no other joint accounts or bills under both names.

Experian_company_representative

Savings aren't listed on credit reports and don't therefore create financial links.

James Jones

Conrad

Experian_company_representative wrote: »

Savings aren't listed on credit reports and don't therefore create financial links.

James Jones

None the less the lender and solicitor will be very interested in source of deposit and where the lender realises it's comming from a spouse not named on the mortgage, this is highly likely to be declined as it will be obvious you would have an interest in the property.

I am not recommending anything here, but were the deposit notionally comming from your partners parents as a gift, this would be acceptable but an audit trail of evidence is often requested so a recent sudden transfer to this third parties account would not look good. Furthermore if that third suddenly died, you would have a hard time getting the money back. Another downside is if you split with your partner, the third pary and he may claim you have no claim on that money.

This is all to do with money laundering regulations.

Thrugelmir

Conrad wrote: »

I am not recommending anything here, but were the deposit notionally comming from your partners parents as a gift, this would be acceptable but an audit trail of evidence is often requested so a recent sudden transfer to this third parties account would not look good. Furthermore if that third suddenly died, you would have a hard time getting the money back. Another downside is if you split with your partner, the third pary and he may claim you have no claim on that money.

Or a creditor appears from the shadows seeking repayment of the money gifted.

upstaged

I don't know if this makes any difference, but although the money is mine, it's actually in my dad's account at the moment. He could just as easily pay the money into my husband's account as to mine, but I don't know if that's any better (since the question would then be raised as to why my dad suddenly paid a large amount of money into his account). Equally I guess you could go to extreme lengths of transferring money between people (e.g. from my dad to my husband's parents to my husband) but that would look extremely, and deliberately, dodgy if somebody looked into it.

There are no creditors who may appear, for the record - neither of us has any debt and we have seen each others' credit files.

But - to clarify - it sounds as though it's quite likely that the lenders would investigate the source of the deposit and therefore he would actually struggle to get a mortgage, is that right? Sorry, I'm quite new to all of this and just want to make sure I've understood - we're just trying to work out whether it is worthwhile pursuing it.

holly_hobby

A solution would be that Dad is gifting the deposit, it will be evidenced as being tsfd from his account to your Hubbys, and Dad will have to sign a gifted deposit disclaimer (bascially saying that the capital is feely given without condition or the requirement of repayment - which technically is correct if we close one eye to the fact that the capital is actually Dad merely returning your own monies to the pot).

If you aren't party to the mge, you will have to sign a consent to vacate disclaimer - which is common to all cases where there will be individuals over 17 yrs old, whom will be resident post completion. (and completely standard).

Of course, you must accept that if the mge payments are not maintained by your husband, you have lost your capital plus your home of course.

And of course your husband will be the sole legal owner - which I'm sure you're happy with given your initial post.

Having said that, assuming you obtain a mge in Hubbys sole name, there wil be not automatic tsf on death, so you must ensure that there is at least sufficient life cover on him, in trust for you, (joint cover if affordable), to repay the mge on at least his earlier death - as upon such an event, the mortgagee will demand repayment of the mge, which may well leave you homeless if you can't secure a mge to redeem the mge (updating of wills too).

And whilst I do appreciate CCJs disappear following their 6th anniversary, we must consider the facts that death could happen at any time before this period is satisfied or even the fact that you may have issues securing a sufficient mge to repay the debt, whenever you apply and for whatever reason (not saying you will, just covering possabilites to ensure fully rounded consideration is given to the circs you may find yourself in, and to ensure that you look at life provision on hubby as an essential).

Hope this helps

Holly