Mortgage application - credit file

Non_compos_mentis

Hi guys,

I had posted this on the credit file section but was told to post it here as well.

Whilst I am looking to get a mortgage in about 12 months, I am fully aware that my credit file has been less than spotless so I am wondering if you could share your pearls of wisdom and help me understand how mortgage lenders are likely to interpret my credit file. I know every lender makes their own decisions but I have no idea what to make of my credit file.

A bit of background, a few years ago I was a bit naive and disorganised so missed a few payments on one particular card (HSBC credit card) which has been closed but the 6 years are not up so it is still showing on my file. Apart from that, despite being at the same address for the last 10 years, I never bothered to be on electoral register till recently.

The details on my equifax file is as follows:

• Financial associates: No data
• Electoral Roll: 1 year
• Credit information: see below
• Court Information: No data
• Notice of Correction: No data
• Previous Searches: Table 1 - 2 searches (07/07/13 and 28/02/13), Table 2 - 12 searches (majority being to request credit reports and Identity Check to comply with Anti Money Laundering Regulations)
• Gone Away Records: No data
• CIFAS: No data

Credit history

AMEX Charge card (closed)
Start date: 10/02/2011
Settled date: 10/12/2012
Payment history: No late payments

Barclays - current account 1 (open)
Start date: 16/05/2009
Overdraft limit £3,520
Overdraft usage: fairly regular
Payment history / exceeded overdraft: No late payments and overdraft not exceeded

Barclays - current account 2 (open)
Start date: 08/04/13
No overdraft
Payment history / unauthorised overdraft: No

Barclays loan 1 (closed)
Start date: 10/03/2011
Settlement date: 09/08/2011
Terms: £373pm for 24 months
Payment history: No late payments

Barlcays loan 2 (closed)
Start date: 06/06/2012
Settlement date: 06/11/2012
Terms: £291pm for 48 months
Payment history: No late payments

Barclaycard 1 (open)
Start date: 26/02/2010
Credit limit: £10,200
Balance: £9,061
Promotional rate: Yes
Minimum payment marker: No
Payment history: No late payments

Barclaycard 2 (open)
Start date: 24/08/2012
Credit limit: £2,000
Balance: £1,598
Promotional rate: Yes
Minimum payment marker: No
Payment history: No late payments

Capital one (open)
Start date: 29/06/2011
Credit limit: £1,100
Balance: £37
Promotional rate: No
Repayment: Paid in full
Payment history: No late payments
Cash advances: a few in the last 12-18 months

HSBC (closed):
Start date: 18/10/2005
Settled date: 29/05/2009
Credit limit: £500
Balance: 0
Payment history: 5 late payments in 2007 (May to July and then October to November), 9 late payments in 2008 (March to July and then October to December)

MBNA (open)
Start date: 13/04/2011
Credit limit: £5,600
Balance: £4,560
Promotional rate: Yes
Minimum payment marker: No
Payment history: No late payments

Natwest - current account (open)
Start date: 08/06/2005
Overdraft limit £1,000
Overdraft usage: fairly regular
Payment history / exceeded overdraft: No late payments and overdraft not exceeded

Natwest CC 1 (open)
Start date: 13/04/2011
Credit limit: £3,050
Balance: £2,789
Promotional rate: Yes
Minimum payment marker: No
Payment history: No late payments


Natwest CC 2 (open)
Start date: 08/05/2010
Credit limit: £1,250
Balance: £1,014
Promotional rate: Yes
Minimum payment marker: No
Payment history: No late payments

Nationwide - current account (open)
Start date: 08/04/13
No overdraft
Payment history / unauthorised overdraft: No

Natwest loan 1 (closed)
Start date: 31/03/2008
Settlement date: 09/04/2009
Terms: £95pm for 36 months
Payment history: No late payments

Natwest loan 2 (open)
Start date: 12/01/2012
Settlement date: Due to be repaid next month
Terms: £371pm for 24 months
Payment history: No late payments

Notes

1. The balances are a couple of months out of date
2. I have used some of the credit cards (Barclaycard / Natwest) and the AMEX charge card for cash advances in the last 2-3 years (pre-promotional rate). However, I have always paid it off in full.
3. I have used MBNA / Natwest for money transfer (on a promotional rate)

I am aware that the HSBC record will drop off in 2015, as mentioned above we are looking to get a mortgage towards the end of next year. I am trying to use the next 12 months as wisely as possible to ensure that the credit file is in the best possible health.

I am also aware that I need to pay off the debts and have a significant deposit before I can even consider a mortgage. However, given my income level and a trust maturing (only to be used towards a house), I should be in the position to afford to pay off all the debts and afford a deposit.

I understand the credit file is in tatters at the moment possibly due to the following issues such as:

1. The HSBC account, how of an impact will this have?
2. Potentially the cash advances, how far back would the lenders go and how much impact would this have?
3. The regular use of OD on two accounts, how far back would the lenders go and how much impact would this have?
4. High availability of credit / utilisation rate, how far back would the lenders go and how much impact would this have? Additionally, if I were to close accounts then yes it would lower my availability rate but potentially increase my utilisation rate.

Are there any other issues that I should be aware of?

Thanks,

NCM

kingstreet

What's the loan to value?

ACG

How much are you intending to put down as a deposit? As a percentage?

5% is going to be an issue, 10% could be possible, 15% or more i would be pretty confident this could be placed.

In order to improve your chances - clear the overdraft or at least make a start on it.

Why have you got so much on credit (cards/loans), i think i would ideally prefer these to be cleared or at least less than you have (You dont have to answer this, its more for you to think about your spending habits) but assuming the income is enough to support it then it should not be a deal breaker.

Take your reports to a broker, but as i say assuming the deposit is 15% plus i dont think you should have too many issues.

Non_compos_mentis

Thank you Kingstreet and ACG,

The LTV will probably be 80-85% and the property will be in London/Greater London/South East (if that makes a difference).

I have 2 overdrafts - Natwest and Barclays. The Natwest overdraft has been clear since last month and the Barclays overdraft will be cleared by the end of this month.

Additionally, the reasons for the credit have already been addressed and the accumulated debt will be tackled at an average of £1.5 - 2k per month, so it should be coming down very, very quickly.

The income level is base of £55k, car benefit of £5k and bonus of £6 - 15k plus other non-cash benefits. My gf's income is a little less, £45k base plus bonus of £5k.

You said it could be placed, looking at a base (combined) salary of £100k, would a mortgage of £400k be achievable and what sort of rate would it be?

Thank you so much for your help!

NCM

Dave_Ham

You will be absolutely fine from the information provided at 10% deposit + (in my opinion)

This is on the basis that you do continue to clear down the unsecured credit and do not miss a payment on anything in the next 12 months.

To be honest, if the deposit comes along; I would suggest a mortgage on sensible rates is achievable sooner rather than later.

Best of luck

ACG

Even with the debts, i would imagine a £400k mortgage should be achievable but it would be better to have them cleared or at least a lot lower than they currently are.

Non_compos_mentis

Thank you Dave and ACG.

You don't know how relieved I am to hear that. I was absolutely convinced that I was screwed till at least 2015, potentially longer.