Mortgage with Bad Credit

DanSpooner

Hi There,

Me and my girlfriend are looking to get our first flat together and have seen some we are interested in. We're looking at purchasing a share of the flat (25-35%) so need no more than £80,000. We spoke to a mortgage broker and he said that our salaries combined we fine for the properties in mind and that we should view them and get back to him when were ready. The problem is he asked for credit reports and I have a "Very Poor" (504) credit rating while my girlfriend has "Excellent". I admit I've always been bad with my money but if I was paying a mortgage then I would be fine with payments. On my credit report the negative factors are Missed Payments (one recently for a phone bill), I am not registered on the electoral role (as my parents sold their house, so I now live with my girlfriends parents), and a default from a couple of years ago.

We spoke to the mortgage broker and he said he would be unable to find a lender for us.

We do not want to rent as the mortgage repayments (plus other bills) would be cheaper than renting, and renting would make it hard for us to save money. We have a deposit of around £5,000 (it can be increased to £8,000 if need be).

We're absolutely gutted from the news and I was wondering if there is any way we can get a mortgage between us?

Thanks in advance!

EMac_2

You could maybe do it in your gf's sole name if she can afford the mortgage alone.

DanSpooner

Hi EMac,

My girlfriend's £12,000 and mine is £20,000, so I dont think she would be able to get one in her name...

Is that the only option?

EMac_2

I'm sorry but if the quarter share is costing £80k your gf's £12k pa isn't going to do it. Even at 5 time her income its only £60k. Maybe look for something at that price for a 25% share.

In the meantime get on the electoral role if you can, and the obvious, stop missing payments. Maybe ditch the phone contract and go PAYG but paying the contract helps your credit score. The default is a big pain too, its severity depends on the date, amount and whether it was settled.

You are using a broker so that will help and they can advise on the best things to do to improve your credit score and when best to re-apply.

Best of luck

Jimby509

I admit I've always been bad with my money but if I was paying a mortgage then I would be fine with payments.

I sympathise with you because I am in the same situation. However you have to see it from the lenders perspective. They dont have to lend to you and they wont unless they are pretty damn sure they will get their money (plus interest) back. Your history says you have not met all of your financial comitments so you are high risk. You have to improve your credit rating or enlist the mother of all brokers.

Your default will be having a big impact... When was it? Is it settled? How much for?

It maybe the case of taking time to improve your credit rating. In the meen time you can build a better deposit that would ensure you get a lower interest rate, it is not all bad.

J

kingstreet

There is only one lender offering 95% on Homebuy and it does not like adverse credit. A bigger deposit may give you access to a lender which will accept you, however, your credit history may not only mean no mortgage. It may also mean no Homebuy;-

http://www.homebuy.co.uk/eligibility.aspx

Criteria:

To be eligible for all government funded homes available through HomeBuy:

Your household income must be under £60,000 per year (in London £64,300 for 1 to 2 bed and £77,200 for a 3+ bed property).

You must also be able to demonstrate that you do not have adverse credit history and can afford to sustain the costs involved in buying or renting a home.

You must show that you are not in mortgage or rent arrears, or in breach of your current tenancy agreement at the time of application.

You cannot afford to buy a property that meets your current housing needs without assistance through HomeBuy.

kingstreet

This is from the lender's criteria on defaults and court judgments;-

No more than one county court judgments (CCJs) or default, which must have been satisfied within 3 months of issue, with a total value not greater than £500, within the last four years

and on late/missed payments;-

No arrears on any previous (or current) unsecured loan (including credit / store cards, mail order credit and mobile phone contracts) within the last twelve months, where the cumulative amount overdue at any point reached more than one monthly payment.
or
No arrears on any loan (unsecured or secured including credit / store cards, mail order credit and mobile phone contracts) within the last three years, where the cumulative amount overdue at any point reached more than two monthly payments.

The lending decision is based on credit score, and I suspect the combination of high loan to value, default and late payments will see a decision to decline.

DanSpooner

Hi Guys,

Iv spoken to Lowell (who placed the default on my account) and said if I could pay, would they be able to remove the default. They said no and that the debt is now with Scotcall. I called scotcall and said this has been a mistake and if I pay, could they remove the default. They said they would remove the default shortly after i pay (it has to go back to lowell etc). I asked him to place this in writing and he said "all calls are recorded" and assured me that it would be removed if it is affecting my credit file negatively. Is this true? Can they remove it and if so how can I cover my back? They said they do not send out letters personally etc. thanks

kingstreet

A creditor may remove a default if it has reason to believe it was registered incorrectly.

As to your particular situation, we have no way of knowing if the organisation you refer to has any intention of keeping a promise. Phone call recordings go missing all the time...

Your decision, I'm afraid.

barbarawright

DanSpooner wrote: »

Hi There,

I am not registered on the electoral role (as my parents sold their house, so I now live with my girlfriends parents), and a default from a couple of years ago.

You can be on the electoral roll no matter who you live with. In fact, it's against the law not to register. It may not cancel your bad credit but it will be hard to get a mortgage unless you are registered.