Applying for a mortgage with 2 5 yr old defaults

koneko

Hi All,
I'm a little confused about something. My partner and I would like to buy our first property. We have saved ourselves a 10% deposit and hope to achieve 15% with the help of my family. We are both in good stable well paid jobs for over a year with the same company and earn £56k between us. We are looking at houses between £180k and £230k in value.

The only blots on our credit record are 2 defaults on mine, 1 registered July 08 and the other Oct 08. These are both with the same company, 1 loan and 1 credit card. I got into financial difficulty due to my previous relationship (partner was an alcoholic and as such I ended up taking responsibility for most of the household bills and there just wasn't enough money for everything). I ended the relationship soon after and started rebuilding everything, but the damage was done and although I was in contact with the company the whole time and we came to an arrangement regarding reduced payments, they obviously had to default me. The problem I have is that because 1 of the accounts was a loan (10k), I defaulted with 9k remaining of the balance and as such, even though my payments returned to the normal monthly amount, because the account was defaulted, it was not marked as settled until the last payment was made in December 2012.

I have been looking around at mortgages and found several whose criteria say 'no current unsecured arrears or history of delinquency in last 3 years'. Now I assume that counts me out as my defaulted account wasn't actually settled until last year, despite me making the originally agreed payments for the last 3 years. Is this correct?

Do we stand any chance? Aside from these defaults, our credit reports are both clear and we have been paying rent monthly without fail for the last 6 years.

Thanks in advance. As an aside, we are currently trying to locate a good whole of market broker who might be able to help us but having trouble figuring out how to find a good one - does anyone have any advice about this?

kingstreet

85% is about the highest LTV you'll find with visible adverse.

Check all three versions of your credit files to see what is visible on which.

Ask friends and relatives for a broker recommendation. Failing that, try https://www.unbiased.co.uk, switching off the "sponsored ads only" option so you get a full list.

Call a few and chat to them. Establish how they are paid by requesting a copy of their "Initial Disclosure Document" before you make any commitment.

koneko

Hi Kingstreet
Thanks for replying so quick. I have copied of my report from Experian and Equifax, these show exactly the same, clean sheet except these 2 defaults. I have an account with Noddle, which I believe is a close representation of what Callcredit show - is this correct?

We have tried asking friends but only got one recommendation so far who was a whole of market fee free broker. Very helpful until I mentioned the adverse and then they didn't seem to want to know

kingstreet

Yes.

Fee-free brokers want fast turnover easier business and they may not wish to take on an adverse credit case.

koneko

I have found a local whole of market broker who says that their initial consultation is free and then there is a fee for advising on and/or arranging a mortgage, which is typically £295. We don't have a personal recommendation of this company, but they state that they have experience with adverse credit and testimonials on their website that reflect this.

I suppose we have nothing to lose by getting in contact for the initial free consultation. I guess if they say they can't help, maybe we are not going to get anywhere and will have to wait another year and a bit until the defaults drop off my record.

amnblog

You can get this case done on a decent rate Koneko. Make sure the broker you pick seems to know their stuff and all should be OK.

koneko

Thanks both, I gave them a ring and have booked an initial meeting for this week. There will be no fee charged until we are in receipt of a mortgage offer, so that is reassuring.

Are there any particular questions I should be asking?

koneko

Thought I'd update this. We saw the second option mortgage broker (who we pay once we have a full mortgage offer in our hands). He was fantastic, we were there for an hour and a half and he explained all the processes of the house buying and what services he will provide along the way. He did a fact find, went through my credit rating etc and said that it was worth trying the Halifax first as they will consider each case based on all factors and our affordability is very good (they will lend £247k and we only want up to £195k max with 15% ltv) and the rest of our credit history is good with the exception of the defaults.

He also gave us a fallback option of a non high street lender if we have no luck with the halifax, the interest is a little higher, but no-where near as much as we thought it would be, and still well within affordability.

We have a viewing booked today, but there are very few available houses in our preferred area, so it could be a while before we find 'the one'.