Mortgage application declined - no recent credit history

Calamity_Jen

Had a phone call from the broker today to say that Abbey had declined our mortgage application, because there is pretty much nothing on my credit history.

I checked, and it's true, I had a credit card and an overdraft a few years ago which I cleared, but I've not had any credit arrangements for a few years - been spending within my means, and saving.

The broker has recommended another one to apply for, which has terms that are much less desirable. The only other option I can think of is to try with my bank (who won't go through brokers), but they have an upfront fee of £999, which is unrefundable, even if the application is rejected.

Although I understand that the lack of recent history makes me more 'risky' in terms of how I'll behave with a mortgage, I can't help but feel I'm being penalised for being responsible. I'm also worried that the flat we've put an offer on will end up going back on the market because we can't get a mortgage quick enough.

Just also found out that my OH, who I'm going into the mortgage with has a similar report to me - his is slightly lower, but he also has a credit card which he pays off in full every month.

Anyone any suggestions? Please be nice, this is all new to me!

kingstreet

I use smaller building societies who don't credit score, for such cases.

I also use a trick when doing the application to go for slightly less than I need.

For example, if looking for 90%, key it as 89.9%, or 84.99% instead of 85%. That's an old Abbey trick they told us to do.

What is your loan to value?

Calamity_Jen

We're on a 90% LTV - although we could easily get that down slightly (but not to 85% unfortunately). I'd been told that it didn't make a difference, but that was in terms of rates, not actual loan amount. Funnily enough, the calculator on my bank's site would only give the amount needed if there was an extra £500 on the deposit, taking it down to 89.6%

Do you know how I would find a smaller building society? Would it be a case of looking locally?

Thanks

GMS

With a decline already you would be best advised getting copies of your credit files. £2 statutory reports from Experian, Equifax and Call Credit and getting them to a broker.

Applying at random could cause more issues.

Your bank I assume is HSBC? Very unlikely to be successful if Abbey have declined on credit score.

kingstreet

Some do operate only in narrow geographical areas. I use Dudley, Tipton & Coseley, Leek United because they lend in my area.

On the other side of the coin, I lose out on Cambridge, Newbury etc because they won't lend in my part of the Midlands.

Swings and roundabouts I guess.

You may not get the best rate, but you will get a mortgage. It depends on your priority. If you want to "rate chase," get a credit card and spend six months building up a credit usage history, or follow my route...

hamster2013

i have been in the country for 15 months
0 credit history- as i dont have a credit card or any loans
i come from eu - dont have any loans there either

I banked with HSBC since i have been in the uk so my obvious reaction was to walk in the branch and speak to them about the mortgage.
they were very helpful, we discussed the paper work - i got it all sorted
i had my deposit with them already
borrowed 70% LTV - and got no issues
i am assuming the 90% LTV does create complications - but there is no harm in speaking to your bank manager at this stage.

Thrugelmir

Calamity_Jen wrote: »

Had a phone call from the broker today to say that Abbey had declined our mortgage application, because there is pretty much nothing on my credit history.

Unlikely to be the full story. As has been suggested look at your credit files to see what your history is like.

Lenders can be extremely picky at 90%.

Calamity_Jen

I looked at my credit report - there really is nothing in the last 5 years.

Had a credit card debt (can't remember how much, but less than £500) and £1500 overdraft from my student days - graduated 2005, all paid by 2007.

The only negative on my report was that the amount of credit available to me is £500 (overdraft, haven't used since previous times).

No credit card, no phone contract, no loan.

My outgoings have always been less than my income, so I've had no need of it. Thought I was doing the responsible thing by keeping within my means and boosting my savings.

OH's report has a bit more too it, no issues but he does have a credit card that he uses (and pays off in full every month). But the broker said the problem was with my report.

Experian_company_representative

Lenders do like to see some credit history as it's evidence you can be trusted. Loss of advice on the MSE site, and Experian, on building up your profile. While the refusal isn't recorded on your report, just the search, lots of searches can become a negative factor. So a others have said, plan your next steps carefully and avoid a scattergun approach.

James Jones

Dave_Ham

I would suggest this is more about choice of lender and less about you as applicants.

Get your limited credit files to a broker and would imagine this is still possible.

I would assume your current account will show on your reports, as will utilities and they will be enough in addition to OH credit card repaid each month.

Good luck

hamster2013

[off topic]
Experian company representative should really use a spell checker if they are representing a company
not 'loss of advice' but 'lots of advice'
not 'so a others have said' but 'so as others have said'
[/off topic]


what is holding you to talk to your own bank ?
hsbc do have a £999 fee product, but also others where the fee is less.
upgrade to an advice account with them and get a great rate at lower fee's.... plus it will include worldwide travel insurance and car breakdown.: just these two will pay for the account.

I don't think the only reason for refusal is lack of credit history - again - banks dont rely blindly on the reports - some don't even use them.
if you have managed your accounts responsibly it is indeed a pro - that will show if the affordability matches, that you can be relied upon to pay back the loan.