refused mortgage - advice needed

moneemonee

I plan to see a broker but any advice in the meantime would be great.

myself and my husband applied for a mortgage (FTB) with natwest in ocotber 2012, we had a 10% deposit, have always banked with natwest with good accounts.


Both our credit reports are either excellent or very good.


We earn approx £65K a year between us, we have both been in stable employment for over ten years with the same employers.


Debt £2k on a natwest credit card which is currently interest free.


Anyway we applied and had an agreement in principle stragiht away, however when it went to underwriters it was declined due to the use of Pay Day loans


Naively I thought it would improve credit score (which actually it did!!) and so took out a payday loan 3 months in a row leading up to us applying, I only took it out for 2 days and oaid it striaght back.


I appealed the decision informing them of the above, also advising them we had access to savings/overdraft/creditcard at that time which they know as they hold all my accounts but chose PD loan for above reason.


appeal was turned down as they said a PD loan showed we could not manage our money


We would like to apply for a mortgage again, we now have a 15% deposit (looking in price range of £130k - 150K) so well within our affordability.


My concerns are
1)will being refused 3 months ago go against us
2) will the pay day loans taken out go against us?
3) what are our chances of getting a mortgage?


Any advice greatly appreciated

GMS

There are much better ways to improve credit score but that is of no use to you now.

Get copies of your credit reports from Experian, Equifax and Call Credit. £2 statutory reports are fine. Get them to a broker.

The decline will show only as a search although there is usually a question asking have you been declined previously.

Payday loans are not viewed well as you have found out. A broker could speak to a lender prior to applying to get the point across.

Don't apply at random to lenders, definitely seek out a broker

ACG

1)will being refused 3 months ago go against us - yes
2) will the pay day loans taken out go against us? - yes
3) what are our chances of getting a mortgage? - It should still be possible.

Payday loans are a hugggge flashing red light for lenders. That being said, with a decent lender you should be able to get around this by showing that you had credit available if you needed it.

I think you will struggle with high street lenders and your best hope is going through a broker. If you get in touch with a broker you should be alright.

Figtree

Would a payday loan which was paid off two years ago also be a huge flashing red light (or just a smaller one)?

R_P_W

Your actual credit score is a worthless number. Lenders don't use it - it is just made up.

You cannot undo what you did but why did you think having a pay day loan on your file would look good to a lender?!

ACG

2 years ago probably wont be too much of an issue.
It depends on your application as a whole, that alone shouldnt stop you getting a mortgage.

Thrugelmir

moneemonee wrote: »

We earn approx £65K a year between us, we have both been in stable employment for over ten years with the same employers.

Use of payday loans. Underwriters will question why as would be a major concern.

droiderm

As someone said check your credit reports
it may not show up on all three. It could then be possible to apply to a lender who looks at only the others.

moneemonee

droiderm wrote: »

As someone said check your credit reports
it may not show up on all three. It could then be possible to apply to a lender who looks at only the others.

Thanks for this, it only shows up on Experian but not on the others, unfortunately I think this is the one that is used by most lenders

chrisfurbs

Idiots thinking a pay day loan wont affect anything it shows u are so desperate u are willing to pay stupid intesest

ValHaller

chrisfurbs wrote: »

Idiots thinking a pay day loan wont affect anything it shows u are so desperate u are willing to pay stupid intesest

It shows nothing of the sort if you read the opening post.