Poor Credit Mortgage?

Hilser

I wonder if anyone can offer advice. In 1999 I purchased a 25% share in a shared ownership property for £15,000. I would now like to buy the remaining 75%. The property is now valued at £150,000 so the remaining amount I need to buy is £112,500.

I have savings of around £23,000 (this was saved to pay off the £15,000 mortgage with Santander). There is no penalty for paying this off early.

Using a mortgage calculator, my income should be sufficient to get a mortgage for remaining share, however I have concerns over my credit rating and securing this. I have had issues in the past but have managed to improve my score over the last year. My Experian reports shows as Excellent but I don't really think this is the case. However I have no outstanding debts and have used a credit building card to improve my status paying the balance off in full each month which has had a positive impact on the score.

Would you suggest paying off the original mortgage in full and can anyone recommend any mortgage suppliers for poor credit customers.

Any other advice would be welcome on the best way to resolve this.

Thank you for your help.

Tixy

What shows on your credit reports that you think is likely to be viewed as negatives by a potential mortgage lender?

Do you have any missed payments showing? any defaults? CCJs?

Hilser

I have a default for £700 from 2010. The report says my highest credit limit indicates a higher risk (£250). This card has been paid satisfactory for 12 months however a couple of late payments 13-24 months until I got set up on direct debit. My mortgage has been paid satisfactory for 58 months however before that there were some late payments. I also had some pay day loans (all satisfactory paid), the last one in May 2013. The report highlights that the age of my credit accounts indicate a higher risk as I've only had the credit building card for about 20 months.

Thank you.

Tixy

The default on your credit file will likely cause a problem to mainstream mortgage providers.

I'd probably start by speaking to a independant mortgage broker for some advice with a copy of your credit file. They should be able to best advise relating to the existing mortgage and whether it is best to repay that first.

You could always try speaking to your existing mortgage provider to see if they are able/willing to extend your mortgage for the remaining purchase given your history of repayments with them.

Hilser

Thank you. Can you offer any guidance on the default as I have found conflicting information. If I pay it and it is settled, will the date it disappears be 6 years from now (the settled date), or 6 years from the default date (2010). Will settling the account make any difference to likliehood of getting future credit?

Tixy

Sorry I had assumed it was settled. An unpaid default will likely be a major barrier to being accepted for a new mortgage.

It will drop off your file 6years after the default date shown on your file.