Mortgage with default but high earner

divorceishard

Hi everyone, i recently posted on this forum and got some very good advice and im looking for some more.

Im looking to help my son and his girlfriend get a mortgage but there are some circumstances which might prevent this from happening. My son has a job he is taking in 6 months and until then is on gardening leave, and also he has a chequered credit history so we would rather leave him out of the discussions at the moment.

The plan is that i get a mortgage with his girlfriend and when he is back on his feet and has been working for a little while he will then take over/transfer/remortgage in him and his girlfriends names. I have been doing a bit of research and it seems a joint mortgage would be the best way to go, but someone suggested i could act as a guarantor and have the house solely in her name, but as i understand there a lot less 'products' available for this type of mortgage.

Let me tell you a little about our situation.

Myself: I have a mortgage on a house that is worth 200k with approx 15k outstanding, however this is a joint mortgage with my ex-husband, although we havent divorced. He lives in the house but i continue to pay the mortgage dont ask me why its a long story, but the house will most likely be sold in the next 12 months.

I also have 2 defaults on my credit file, one dating back to June 2008 for £563 and one from November 2012 for £129. They havent been satisfied and the main reason i have them is because i didnt open the letters being sent to me as i now live in a flat with a communal letterbox and mail has gone missing. I know i could probably fight the defaults as i didnt recieve default notices but i want information as things stand at the moment. I also have a couple of missed payments on unsecured loans on my credit account over the past 24 months.

Now the good points: I have never missed a mortgage payment in 20 years, i also have had various loans over the past 10 years which were fully paid on time with no missed payments at all. I have no credit cards and no credit available to me (more through choice) and am only currently paying my mortgage (approx 15k outstanding @ 350/mth) and a loan (2500 outstanding @ 350/month)

I earn 85k a year and i work for the council.

The girlfriend: Perfect credit history, had a car loan and personal loan all cleared off without any missed payments and earns 25k a year.

My questions are:

1) Would it be better to apply for a joint mortgage or go for a guarantor mortgage, it seems from reading the guarantor mortgage that i would be 100% liable so would need to earn enough, also from which the calculators say i do by quite a margin, but less providers.

2) Would the fact that i earn a fair amount of money overlook any defaults on my credit file or does it not matter at all.

3) What sort of deposit would we need to raise? We were looking at 10% but after reading around the forums on this site i get the feeling that any default means minimum 15% deposit, which wouldnt be a problem but im asking out of interest.

4) Would the fact i have a default mean automatically that high street banks are out of the question. Would it be worth asking my current mortgage provider which is the woolwich, as i have a good history with them, or does this not get taken into account at all.

5) Could any mortgage be secured on the equity i have in my other house, we dont speak and he wouldnt sign any forms to help me out and both our names are on the mortgage. Again more asking out of interest.

6) Could i have any general advice with regards to the situation.

I posted here before and got some really helpful information and was very greatful, and im hoping i get some more helpful info. I know it would be best to speak to a mortgage advisor which i will be doing but i wanted some rough advice.

Many Thanks Again

Thrugelmir

Be difficult to fight the defaults. As simply put you have failed to repay the debt. Being unsatisfied will certainly have a negative impact on your credit score in the current climate. As will indicate to a potential lender your attitude towards the matter.

What size of mortgage do you envisage obtaining?

divorceishard

I could satisfy the defaults immediately and would do so prior to applying for a mortgage i forgot to put this. Also the houses we are looking at are in the 200-250k price range, with the deposit varying accordingly, but ideally 10 or 15%.

ACG

I will be honest, i have scanned through that post. It was a bit long and my teas on....

However...
Woolwich, you might get whats called a pre agreed mortgage limit (PAML) with them, but im not sure they would allow it to be used to effectively go on a mortgage with your sons partner for their house.

Presuming they dont, i would knock woolwich on the head, Woolwich and adverse do not mix well.

With a 15% deposit i would be 99% certain you could get a mortgage, possibly on the high street (although im not 99% on that), but most likely not.

A few things that will come into play are your age, yours and your sons partners monthly commitments - presumably you are paying a mortgage and rent at the minute? If you have other loans, HP etc this will all come into play.

I say this a lot on here but i think for this case it really is worth sitting down with a broker, your credit reports, your son and his partner as there could even be a way to do this with your son adn his partner alone based on the fact he has a job to go to.

This could be quite a complicated mortgage to place or it could turn out to be fairly simple, but i think sitting down with someone getting everything needed by the broker out in the open, they could sit and have a think about ways to get this on the books of a lender.

michelle2008

Can I be really cheeky and ask what job you do? Out of sheer curiosity - it's a great salary!

Not so much info as to identify yourself of course - just a general idea!!

Thrugelmir

divorceishard wrote: »

I could satisfy the defaults immediately and would do so prior to applying for a mortgage i forgot to put this.

You are settling debts not defaults. The defaults will be remain on your credit file until they become time barred. Your son will suffer likewise. So my advice is pay up if the debt is not itself in dispute.

As ACG suggests speak face to face with someone. As the facts will have a major influence on the outcome.

divorceishard

Thanks for the comments.

ACG - Thanks for your info its very helpful, with regards to age I am 55 and my son and girlfriend are 28, I understand most lenders dont want repayments to go beyond 75, so the term would most likely have to be 20 years, which wouldnt be a problem with regards to repayment amounts, just getting the actual mortgage itself is, but i agree i need to sit down with an advisor and get some solid advice. With regards to the rent coming into play of monthly outgoings, we would probably go down the road that the rent payments would cease once the mortgage is aquired, maybe not strictly true but is this an approach that would help?

Michelle - I am a headteacher at a local secondary school

Thrugelmir - Again i have not conveyed what i meant in my previous reply to you. I know the defaults will not disappear just by paying them off and they will remain for 6 years from default date, what i meant is i would pay them to mark them as satisfied and at least get some, if any, brownie points for paying them off.

I get the general idea from ppl that a joint mortgage would be a much better option than the guarantor mortgage, would most people agree. Also any advice on using the equity from my other house, not for a deposit, but rather something for the mortgage to be secured on? Any thoughts on this?

Also if i were to up the deposit to say 25% does that open up a lot more doors or am i still being negatively looked upon because of the defaults?

Thanks all again for the quick replies....

GMS

divorceishard wrote: »

With regards to the rent coming into play of monthly outgoings, we would probably go down the road that the rent payments would cease once the mortgage is aquired, maybe not strictly true but is this an approach that would help?

Michelle - I am a headteacher at a local secondary school

Lying on a mortgage application may lead to 'ex' being added to your job description.

Thrugelmir

As your current property is jointly owned then releasing equity by way of a secured loan is not possible.

Your son's girlfriend does not earn enough to obtain a mortgage of that size in her own right. So a guarantor has no bearing.

Said with all due respect. Due to the nature of your occupation what's the likelihood of you continuing employment until you are 75. So any proposed mortgage term may well have to be far shorter than a 20 year term. Given the size of the mortgage is this affordable.

Annisele

divorceishard wrote: »

Also any advice on using the equity from my other house, not for a deposit, but rather something for the mortgage to be secured on? Any thoughts on this?

You said you have a joint mortgage on the other house with your ex. Assuming the ex is a joint owner as well as a joint borrower, you can't do anything with that house without his permission.

Even if he gives permission, the only useful thing I can think of that you could do with the other house is to borrow against it, then use the money towards the new house. But you say you don't want to do that.

In theory you could give a new lender a second charge over the first house (with your ex's permission), but the new lender is extremely unlikely to want that - so it wouldn't help.

ACG

Lying on the app form isnt really ideal, if you get found out you get flagged for mortgage fraud, that then affects you, your son and his partner for the foreseeable future - its not worth the risk.

Any lender may ask to see your consent to let for your existing property etc. Providing you have a 15% deposit plus then the defaults are the elast of the problems.

Going beyond retirement age (65 - 68) or 70 at most if you say your planning on retiring at 70 will come into play. Anything beyond 70 and they generally base income on Pensionable income which for yourself probably isnt a major issue anyway.

There are a number of ways this business could be submitted - no guarantee any will get accepted but there are certainly options. But even for a standard scenario we brokers complete a factfind with customers which can take an hour - trying to give you clear direction off a post on here may miss lead you which is why anyone qualified will be reluctant to point you in any one direction.

(I hope your not an English teacher... i will no doubt be in the bad books!)