how good will my credit need to be for decent mortgage- previous payday loans issue

lilylaren

hi all

hope someone can give some basic advice as i know it varies on a lot of factors

our current adverse ( 2 defaults each and few late payments in last few years) meant our latest attempt at a mortgage (through a dip?) came back with one lender.. unfortunately the lender does not lend to people who have had payday loans (the last was 7 months ago) all reported on experian as satisfactory- never missed a payment.

ive recently sold an inherited property so have a large (over 200k) deposit we was looking at buying around the 300k mark.

anyway my question is how clean do our reports need to be for us to be in a position where we are likely to get accepted for a mortgage.. in 6 months time we will each have only 1 satisfied default (mine for a £500 debt and my husbands for a £150 debt) is this still seen as a lot of adverse?

trying to figure out if we should use the cash to pay off our btl property and buy another flat outright or if we should keep cash in bank for a deposit to try again in 6 months?

i really hadn't thought we would have a problem with such a low loan to value! but am aware alot has changed since my first mortgage which was self certification and 10% deposit!

ACG

What dates are on your defaults?
How much were they for?
Who were they to?

What do you class as a decent mortgage?

lilylaren

Hi thank you for the quick reply.

Defaults remaining, one for Studio £154 May 2010 and settled Jan 11 when we found out about it.
mine for cabot (halifax current account overdraft) £560 from June 2013

we was willing to pay the 4.99% precise had offered us as with the small amount of ltv was more than affordable.

lilylaren

atm we each have an additional default - mine with Lowell for £1300 from October 2008 (so gone in 6 months)
and husband one for virgin media in 2009 which we are currently disputing so will be gone.

sieve

Are they satisfied?

If so, and they have been for a while, I have just has a formal mortgage offer through from Nationwide, with significant adverse (albeit settled) credit (including a bankruptcy) - after a broker told me I had no chance. I just applied direct and after giving them all they asked for, we got a DIP, and then a few weeks later the formal mortgage offer.

Might be worth a try - but make absolute sure that you can comfortably afford the mortgage you are going for even if interest rates climb to 7%+.

Good luck!

ACG

How big is your deposit as a percentage?

lilylaren

house we have started purchase on and now looking like we will have to pull out of was £305,000 and we was looking to put down £185,000 as need to pay stamp duty and wanted to keep some savings so based on that would be about 40% ltv so 60% deposit

ACG

Sorry you did say.

I would imagine there will be a lender for this.
Rate wise i would say 5-6% is more likely but i reckon there will be answer.

Is your broker still looking into it?

lilylaren

nope he said it wasn't going to happen with his lenders due to adverse (defaults and missed payments- this was based on me having three defaults and husband having two though..) but moved me over to a specialist broker (who ive dealt with before) but from what i understand that would involve not going down the residential mortgage route..
i was told the lender that would do it (precise) were a no go as we had had previous pay day loans..

Do you think that if we wait the 6 months so we only have one default each that this could be doable then?

ACG

The issue is the pay day loans and the date of the most recent default - both knocking out different lenders.

Forget the other defaults, they are that old there are a few lenders that would ignore them.

Id suggest you find a new broker (not one within an estate agents), i wouldnt guarantee there will be a lender but i think at that LTV i would give it a go with another broker.