Advice/Chances of getting approved for Mortgage Guarantee Scheme

cantona2289

Hi

I've currently been self employed for the last 3 years averaging about £17,000 a year.

I'm wanting to get a mortgage using the Mortgage Guarantee Scheme and was hoping to get a mortgage needing just a 5% deposit, for a house between the £45-60,000 range

Recently, an independent broker has run a search and advised that the maximum lending that I could get would be 85%, would this have an impact on my chances of getting approved through this scheme?

My credit file is showing as fair on Experian, its showing a considerable amount of settled accounts (22), however the only negative on it is I have had 2 or 3 missed payments on my credit card over the past 12 months, however these are due to drop of in a few months.

Am I likely to get approved for this scheme when it begins or would I be as well waiting for another few months so I have no missed payments within the last year?

Cheers

kingstreet

There is no scheme approval.

If you apply for the HTB mortgage, are accepted at your required loan to value, that's it.

If a broker is saying you aren't going to get more than 85%, that probably means you aren't going to get 95%, HTB or no HTB.

cantona2289

The only thing I can think of for only getting the 85% is because of the late credit card payments, when there is no late payments within a year should this have a big impact on my chances of only needing a 5% deposit?

I have no defaults and very little debt either

besti

As I understand it, you only need to get an 80% loan. But I may be wrong!!!

kingstreet

Late and missed payment show on your credit files for a lot longer than twelve months. How a lender offering HTB - MG products would view these is down to the lender's own criteria and the rest of the case data.

It's virtually impossible to rate your chances at 95% without a full factfind, but I would be pessimistic, TBH.

kingstreet

besti wrote: »

As I understand it, you only need to get an 80% loan. But I may be wrong!!!

Exactly right. You are wrong.

It's a 95% mortgage with a Government guarantee on the top 15% to protect the lender in the event of repossession. It will be underwritten just as strictly as any other 95% application, with the same income multiples, credit and affordability checks.

HTB - MG is not going to get you a 95% mortgage if you wouldn't already have qualified for one.

cantona2289

So what would you recommend I do? Would having 10% deposit make much difference?

After how long does the missed payments not become as important?

Would putting my dad down as a guarantor or going for a joint mortgage increase the chances of getting accepted?

kingstreet

An increased deposit will help. Success at 90% would be more likely than at 95%, but no-one can guarantee you'll pass.

Did your broker trial 90%, or simply suggest 85% would be the best you'll get?

Unfortunately, you cannot pick out a single issue from a lender's credit score and say that will change on a given date. The way a credit score works is a secret known only to the lender and it combines all the data from the application and the CRA data.

If your late/missed payments show on only one version of your credit file, you may have a better chance with a lender which sources from the CRA(s) which are clear. Obtain copies from all three to establish what is visible on each.

A guarantor or joint applicant may increase your chances, but again, it's down to the lender and its criteria/policy.

witchy1066

this is only a thought but could it be the type of property you are looking to buy, being the reason your broker says 85%

I only say this because when we were looking our broker said it would be difficult to get a mortgage with certain lenders of above 85% if the property needed a lot of work , as it is we are having a few problems even at 80%, lenders want to be sure they are making a good investment ,

of course it depends where you live but a house for 40 to 60k would be a hard find in most areas, if you needed to spend thousand on improvements and only putting 5% deposit down this might not look like a good investment in the lenders eyes,

this is only my thoughts and in no way am I implying this is the case with OP

cantona2289

The area I stay in has some of the lowest house prices in Scotland, and the house I had in mind isn't far off move in condition.

No the broker ran a few searches and he said the maximum he could get was 85% maximum lending, it was previously higher than this due to not being on electoral register.

Would paying of the debt I'm currently at 86% of total available have a postive impact as well?

I'm just wondering if any of the other mortgages out there, such as the parents putting so much in a savings account would be suitable or not

kingstreet

So, you're in Scotland?

You might want to investigate the LIFT scheme, which provides an equity loan to increase your deposit;-

http://www.scotland.gov.uk/Topics/Built-Environment/Housing/BuyingSelling/lift#