Can A Human Get Involved In A Mortgage Application?

uktechguy

Hi,

I'm in a tricky position right now and could use some advice.

I used to be pretty bad with money and about 6 years ago got divorced and took on all of mine and my ex-wife's debt. (looking back this was a stupid thing to do, but I was being a nice guy and thought I could deal with it so she could go off with zero debts), this left me with just over £40k of debt.

I made it my mission from that point to eliminate my debt and never get into that position again.

In 2010 I was made redundant and while I had got rid of most of the debt I still had several credit cards and needed to make arrangements to pay less than the usual minimum amounts for some time while I was out of work.

When I got a new job in 2010 I started back up with the payments paying between £500 and £1000 a month - the final payment to the last card was in January of 2012.

Since then I haven't borrowed any money. I did get a surprise tax bill for around £3500 which I now pay £90 a month to and that'll finish at the end of next year - this is the only debt I have now.

My brother is getting divorced and in order to be able to pay his ex-wife her 1/2 of the house value so that his son is not distrupted by things I was hoping to buy half of the house from him (it's currently completely in his name and with £50k left - house value is around £320k).

I've just been immediately rejected on my first mortgage application on the basis of my credit score/check.

When I look in the experian website - My score is 999 / excellent, but there are 2 red elements:

1 - that I don't have any high credit reserves available
2 - that last credit card, which is marked as 'settled' is showing as delinquent.

This seems to be shutting the door on all of my options for getting a mortgage now, despite the fact that I'm looking to borrow only 60% of the value of the property (which also covers paying the remaining £50k mortgage which there is in my brothers name), and that I have a decent job and a good recent (last year) of credit history.

Is there ANYTHING I can do? or am I destined to have that past problem held against me?

Any advice greatfully received.

Andy

Dave_Ham

Hi there,

Firstly, you need to get all of your credit files from Experian, Equifax and Call Credit. Just get the £2 ones.

Assuming there is nothing more sinister and your income/employment stack up, then there should be solutions.

I would not give up, nor should you take another speculative application until you have had someone look through your credit files.

Additionally, is there a reason that your Brother is not going on the mortgage also as this would save Stamp Duty if both on there?

uktechguy

Dave_Ham wrote: »

Additionally, is there a reason that your Brother is not going on the mortgage also as this would save Stamp Duty if both on there?

Thanks.

That's actually a long story - basically he left his last company to set up his own business and as a founding partner was told to expect around £300k for his shares, but the old company found a way to get out of that and he ended up with only £30k, hence the reason why I now am trying to help out.

He was expecting to have the cash to solve this whole situation, but he's now got no income (his new company only makes enough to cover its costs and not pay him right now), so there's no way his situation can help with getting the mortgage worked out.

Because his ex originally wanted to keep the house - he moved out and after some months she changed her mind and said she wanted the money and that she was moving out, so he needed to sell the house or find a way to pay her. Because he doesn't want to displace his son, he was planning to pay her from the money he was due from his previous company (he was making £140k a year and was still employed when they first split up and if she hadn't said she was keeping the house -he wouldn't have left his job and could've just topped up his previous mortgage to pay her).

It's all bad timing really.
Andy

Wh05apk

Your brother will have to go on the mortgage too, a lender will not accept him effectively gifting you the deposit and continue to live there.

Dave_Ham

As above, but so long as his credit record is ok; he can go with £0 income declared...

uktechguy

Dave_Ham wrote: »

As above, but so long as his credit record is ok; he can go with £0 income declared...

Thanks - yes that is the plan.

The problem is that we're getting turned down immediately because of my previous credit problems and the fact that things are ok now and the value of the house is at least £100k more than we're looking to borrow seems to be irrelevant and I can't get past the "the computer says no" first hurdle.

Regards,
Andy

Thrugelmir

Whatever the "reason" for your history. It exists. Until such time as it drops off. You'll face the same issues in obtaining a mortgage.

Not a question of a human reviewing your application. More one of lenders loosening rather continuing to tighten their criteria. Maybe some years before this is the case.

Dave_Ham

Get your credit files and a decent broker and they will make this go away I would imagine.

There are lenders out there and Building Societies that do not automatically credit score.

Definitely a broker case though in my opinion...

All the best

uktechguy

Thrugelmir wrote: »

Whatever the "reason" for your history. It exists. Until such time as it drops off. You'll face the same issues in obtaining a mortgage.

Not a question of a human reviewing your application. More one of lenders loosening rather continuing to tighten their criteria. Maybe some years before this is the case.

That's bad news as this effectively means we'll have to sell the house and displace my nephew from his home which is exactly what we've been trying to avoid.

It just seems crazy that we're effectively saying "please lend us £185k and you can sell our £320k house to get your money back if we don't make the payments properly" but it's not even open for consideration.

Oh well, thanks for the input, I guess I was hoping for too much from the lenders.

Wh05apk

uktechguy wrote: »

That's bad news as this effectively means we'll have to sell the house and displace my nephew from his home which is exactly what we've been trying to avoid.

It just seems crazy that we're effectively saying "please lend us £185k and you can sell our £320k house to get your money back if we don't make the payments properly" but it's not even open for consideration.

Oh well, thanks for the input, I guess I was hoping for too much from the lenders.

No, what you are effectively saying is "I am potentially a bad risk according to my credit history, my brother is self employed, but barely earning enough to cover his costs, so cannot draw any income"

uktechguy

Wh05apk wrote: »

No, what you are effectively saying is "I am potentially a bad risk according to my credit history, my brother is self employed, but barely earning enough to cover his costs, so cannot draw any income"

Ok - thanks for clearing that up for me.

I don't know why I bothered wasting their time if that is all they are going to see. The fact that my brother has been overpaying his mortgage every month for the last 10 years and his brand new company is already earning £6k a month residual from solid customers and means he already has a data center and a full-time employee, and I have eliminated £40k of debt (while also paying rent and bills) over the last 5 years obviously doesn't offer any sort of counter-balance in these situations. For some reason I thought it might.

I'm not looking for any favours - the risk is mitigated by the surplus value in the house.

Well, on the plus side - the house is currently being completely redecorated, so that'll help sell it.