Mortgages and implications

confoos

Right, this is a long and complicated story and I apologise in advance!

I don't have the best credit score, about 3 years ago I had a breakdown and as such have two defaults on my file, both settled in full. I had a few other accounts that were getting out of hand, but all settled now and everything has been fine since then. However, I don't have much recently. I have a mobile phone contract, but that's it. I recently got accepted for a Barclaycard and a catalogue account, which I'm using to build up history so when the defaults drop off (3 long years away) I'll have good recent credit and will be able to get a mortgage. That was always the plan.

My boyfriend shares a house with his brother, it's more than he can afford on his own and they both put a £10k deposit down. His brother is in the army so is away a lot of the time.

My boyfriend and I have been together for 2 years, and we'd really like to live together. I don't want to move into the house because when his brother is back there would be 4 of us living there and it's too small for that. He spends most of his time at mine which means he's paying for a house he barely uses, and I'm paying the rent here for 2 of us by myself.

They're still in the fixed period of the mortgage, so although selling the house is an option there will be fees and they'll probably lose quite a bit.

I think our best option is for me and my boyfriend to buy the brother out, but I just don't know if it's possible. The LTV would be around 86%, and our incomes are more than enough to cover it. We don't earn loads but the mortgage is pretty low.

A quick google revealed that the Woolwich (who they're currently with) will never consider anyone if there's a satisfied default within the last three years, which mine is (just, it will be three years in December) but there are other factors working against me. It's not just one default, there were other examples of poor credit management back then, and I don't have much to show my improved ways. My two other credit commitments didn't start until last month, so while I obviously haven't missed any payments I still don't have much to prove that I'm responsible now.

The reason I want to do it now, is that we've both got self employed interests, and if we have a mortgage in place we can start reducing our paid job hours in order to focus more on that (in a sensible way, obviously) but if I'm successful in going fully self employed by this time next year, getting a mortgage would be impossible.

Do you think a) it's a hopeless case, and b) will applying in joint names damage my boyfriend's credit score? Are we going to be financially linked on the basis of an application, even if it's declined?

happy_bunny_2

Can't help with much of this. I think you need to have opened a joint financial account to be linked, not just an application.

Maybe post on the mortgage board to see if a broker may be able to help.

confoos

Thanks so much for replying! I wasn't sure where the best place to put it was, I think the mortgage board seems like the obvious choice in hindsight!

Tixy

Hi

A joint mortgage application, even if you don't go ahead with it, may well create a financial association on your file. But if that happens and you don't go ahead you can then file a notice of disassociation.

I would imagine you are likely to struggle to get a mortgage but I guess it would be worth approaching an independant mortgage broker with a copy of your credit file to see what they think. You may well find you would end up with a less competitive rate than they have currently (as well as having to pay the redemption fees etc).
Perhaps you may stand a better chance at the start of next year, with a bit more recent positive credit history and your old defaults being that bit older.

Has brother said he would like to sell to you and to find somewhere else to live himsel? Is the 86% LTV based on borrowing a further £10k against the property to buy him out? Or is that 86% based on £10k for brother and additional few k for the early redemption fees on the mortgage?
Will brother be happy with a £10k pay out? is that a fair share of the current equity?

confoos

We haven't discussed the exact figures, it seems a bit pointless at this stage, plus he's away until next month.

He's already said he'd be happy to be bought out, and the 86% is including his deposit back.

We couldn't do anything until after January anyway. It's so frustrating because a lot of things are up in the air at the moment. I don't think we'll be settled until at least this time next year, but by then I should be part time at the very least which will make me an even less appealing prospect to a mortgage provider!

EmmG_2

I think the best thing to do would be to explain everything you've said here to a broker. They might be able to find a specialist lender who can offer mortgages to customers with bad credit.

Good luck!

Dave_Ham

At 85% loan to value this becomes achievable.

Speak to a decent mortgage broker..

pjread

Just me, but personally I'd put up with being a bit cramped on the odd occasion this brother is back to allow you to save whatever you're currently paying in rent towards either buying out the brother (and keeping the LTV under 80 if possible) or getting something else, while allowing your good credit history to build a little too?

No harm in talking to a broker and you might be able to do it, but TBH I'd not expect the best rate and pick of lenders with that history.