Getting a Mortgage with a Defaults

frazyoussef

Apologies if this is in the wrong thread.

Just a quick one...

Can anyone tell me the likelihood of getting a mortgage if myself and my wife have defaults on out credit record? My default is from 2009 for around £600 but my wife's is as recent as 6 months ago for around £350. Both were recently settled but I cant help but wonder how long it will be before we can try and get on the property ladder.

Myself and my partner earn about £40000 a year with a deposit of approximately £45000. We've been in our jobs for over 3 years, renting our apartment for 4 years with no late payments for this or any other bills.

Any help would be really appreciated.

jamesd

Six months is the tougher one there. The deposit will help if you're going to be at 75% LTV or less because that will help to reassure the lender. You can forget some of the fussier lenders like First Direct or HSBC, they will refuse for quite small things. But others aren't so fussy and I think that a broker may well be able to find you something either now or in another six months.

kingstreet

Are the defaults visible on all three of your credit files and what's the deposit as a percentage of the property value?

frazyoussef

Yes the defaults are on all three reports. My wife has just recently taken a Capital One card out for the sole purpose of improving her rating.

In terms of the percentage of the deposit we're looking at properties that are maximum £170,000. So I guess around 25%. Apologies if I've misunderstood your question.

kingstreet

73%. That may be too high for an adverse credit specialist and you may need to get under 70%.

james was right. Talk to a whole market broker about the chances of placing this now.

frazyoussef

Thanks for your prompt reply.

So to get this clear in my head the more deposit we have the lower the LTV % depending on the value of the property? I suppose if we manage to find a property at a lower value say £150,000 that would lower the LTV?

The plan was to seek out a broker just after the hustle and bustle of Christmas and New Year or would you recommend we do this sooner?

kingstreet

Mortgage amount divided by purchase price = loan to value.

Therefore, the LTV gets better if you reduce the price and keep the same deposit, or keep the same price and increase the deposit.

frazyoussef

Appreciate your help. Perhaps aiming for a lower value house would be the more likely solution here.

Ryantymon

I think its pretty difficult to receive a offer if you have defaulted in the last 2 years with the majority of lenders.

You may have more of a chance with a sub prime lender.

jamesd

Yes, lower value home will help. The more the deposit, the better the lenders will like it. Kingstreet has suggested 70% LTV and as a broker will know what the deals are. Perhaps go for 69% to allow a bit of extra safety margin and that would take you to a buying price of £145,000.

When is one year after her default? Satisfied fairly low value default more than a year ago and nice big deposit should make a pretty decent picture for a lender. But do pay attention to what the brokers say more than this generalisation - they can see the actual current deals.

Perhaps a broker might want to say when this might get back into clearly near-prime or even prime territory?

Thrugelmir

frazyoussef wrote: »

My wife has just recently taken a Capital One card out for the sole purpose of improving her rating.

Won't do anything to improve her rating. Taking on new credit lines when having previously defaulted. Actually suggests that no lessons have been learnt.