FTB mortgage, looking for advice & views, what would you do in our situation?

Rovver125

Background - My credit history is nigh on perfect. Partner has bad history, she ran into difficulties back in 2008 before we met and was forced to pass it all to a debt management company.

She settled this debt in April 2011 and became debt free. In an attempt to start re-building her credit, she first took out a pre-paid credit card which she no longer has and is currently using two high interest, credit builder style cards.

Partners annual basic income is 19k. Mine is also about 19k, but last tax year with overtime I earnt 35k. On track this year to earn slightly less but still over 30k.

First ever application for mortgage was in Feb 2012 with a 15% deposit, rejected due to credit scoring. Second attempt was in Sept 2012, rejected again due to credit scoring. Both times we applied through London & Country and only with mainstream lenders.

L&C advised higher interest lenders such as GE may have considered us, but feeling disillusioned with it all, we walked away.

Roll forward to now and we're thinking about it all again. Probably wouldn't apply again until Easter time and still only have 20% deposit, but saving quite rapidly now. (Anywhere from £250-£1000 a month depending on overtime available).

Bad thing is, partner still has two defaults on credit file. One will drop off in October this year, the other doesn't drop off until Oct 2014.

So questions are:

1) Is it worth considering an application with a higher interest lender with the view to switching this in a couple of years when partners credit file is clear?

2) Is it even worth applying again whilst she still has the two defaults on file? I'm assuming she will be considered high risk until these defaults disappear no matter what she does with re-building credit. Would it be better to just forget the idea, save as much as possible and try again after Oct 2014?

Should add that I had a large amount of debt from age 18 (now 31) but always managed it well, played the system and never defaulted etc hence my good credit history, but also never saved as I was an idiot and living the high life I couldn't actually afford. Have been debt free for well over a year now and am brutally frugal with money these days! We are very lucky to have a large portion of our deposit coming from partners dad.

I know only we can answer these questions and make a decision for ourselves. I'm just looking for advice and wandering what others would do if they were in our situation?

Rovver125

*bump* any opinions anyone?

Dave_Ham

How much are you wanting a mortgage for?

Rovver125

Dave_Ham wrote: »

How much are you wanting a mortgage for?

Thanks for the response Dave, we're in Cornwall and the sort of places we have been looking at are in the 130-150k region.

Dave_Ham

Ok, you could probably stretch to this on your own sole name.

Appreciate with gifted deposit you may need to be joint.

You are unlikely to need GE Money etc. rates, a decent broker may well place a joint application with a Building Society as they may be more flexible so long as current last year payments for you both have been on time...

All the best

Rovver125

Dave_Ham wrote: »

Ok, you could probably stretch to this on your own sole name.

Appreciate with gifted deposit you may need to be joint.

You are unlikely to need GE Money etc. rates, a decent broker may well place a joint application with a Building Society as they may be more flexible so long as current last year payments for you both have been on time...

All the best

Thanks Dave, yeah due to the gifted deposit sole mortgage is not an option. We've discussed it at length and neither of us would be comfortable with that option anyway. We both want to do and be part of this together.

Both of us have been on time with all payments, monies owed etc. Only things I've had in all my years of credit have been about 4 or 5 late payments, last one of these was several years ago. Partner has been an angel with money since re-paying her debt in April 2011 and has promptly re-paid anything owed.

So just to clarify, based on what I've said above am I right in thinking that we should be in a stronger position then we were in September, even with her two defaults still on file, with a building society rather then a bank?

Think we're going to take a week off together at the beginning of April and take credit reports, wage slips and any other relevant paperwork to a broker and see what happens. Partner dealt with L&C by phone and email whilst at work, but since we're doing this together, I want to be part of it and sitting down with a broker together has got to be the best way of doing it.

Dave_Ham

Sounds sensible plan, I would expect a sensible solution for you.

Best of luck

Rovver125

Another quick query about our situation if I may.

I have a Capital One account, partner is a card holder too, we use this for all our monthly spending, shopping, fuel etc anything shared basically. DD set up to pay the balance in full each month and every January we get a nice wodge of cashback credited to the account.

Does it make a difference when applying for a mortgage how we manage that card in the month of application? Example, first time we applied, it was after our statement date, but before DD had been taken, hence balance was high at the time.

Is it best to plan application around lowest CC balance of the month (always around the 10th when DD clears) or not use it all that month and pay cash? Or does it not really make any difference?!

Sorry for the further question, just trying to get this all clear in my head so we stand the best possible chance of acceptance next time!

Thrugelmir

To boost your credit score. Consider using a lender such as Halifax or Nationwide as your main bank, along with utilising one of their FTB savings schemes. As this wil enable the lender to have complete transparency as to your personal financial management. Clearly demonstrating that the past is behind you.

Rovver125

Thrugelmir wrote: »

To boost your credit score. Consider using a lender such as Halifax or Nationwide as your main bank, along with utilising one of their FTB savings schemes. As this wil enable the lender to have complete transparency as to your personal financial management. Clearly demonstrating that the past is behind you.

Partner has had an account with Halifax for approx 5 years. I switched to them from Santander early in 2012. We both have reward current accounts and standard current accounts, both have online saver accounts, I also have an everyday saver and a cash isa which is my 'don't touch' mortgage fund pot! The other savers are used for monthly management of money for bills and emergencies.

Both previous applications have involved Halifax and they rejected us on credit scoring both times.

Will look into FTB savings schemes with them and Nationwide, but not keen to switch our bank accounts again if possible!

Any advice on the credit card impact?


*Edit* Wish I'd seen this a bit sooner! http://www.halifax.co.uk/savings/home-saver/

Thrugelmir

Rovver125 wrote: »

Any advice on the credit card impact?

Minimal. Time is the only healer for poor historic credit history.

Underwriting criteria may well tighten further in the short term.

Keep saving.