Getting a mortgage with bad credit rating

Leese

Hi,

My boyfriend and I are looking to buy our first home. His credit rating is very bad. He has 9 defaults on his record.

We are looking for advice on how to address these defaults. Do lenders see all defaults as equally bad? For example, if we got them all settled would it help our chances?

From the advice I have got so far I understand we will struggle to get a joint mortgage (my credit is good), but we are looking for help/advice on how to improve the situation in whatever way we can.

Thanks for reading

GMS

When were the defaults and for how much? Are any satisfied?

What deposit do you have and what purchase price were you looking at?

Leese

They range from almost 6 years ago to as recently as 18 months ago. Small amounts from £60 up to £900. None satisfied but we can pay them off if it will make a difference.

We have £20,000 and still saving. Aiming for £30,000 or more when we do end up buying. Looking for a purchase price around £160,000.

ACG

Im assuming these are all for loans/credit cards/mobile phones? None of them are for a mortgage or secured loan?

Once they are 2 years old and you have a 15% deposit there will be lenders for it.
Alternatively if you wait until the most recent is 3 years old, you can get away with a smaller deposit potentially.

You will probably need the help of a broker though.

Leese

Thank you that's really helpful to know.
Would we be looked upon more favourably if these defaults have been satisfied?

GMS

The contractual payments may be taken into consideration by a lender which will impact affordability.

Do you not feel they should be satisfied anyway? Satisfying them will look better to a lender.

ACG

The honest answer is that it probably wont make a massive difference in the main. Some lenders would want to see the satisfied, others would not mind.

But on the other hand, unless you are disputing them, the money is owed. You should be paying your debts off.

Leese

I'm not saying they won't be paid. I agree fully that they should be.

We just want to know if we should try and pay them off entirely in one go, or set up a payment plan which will show some payments are being made but there is an outstanding balance. If either if those would be preferable?

ACG

Dont set up a payment plan.

AP markers will stop this going through.

Leese

Would a full and final settlement be detrimental also?

amnblog

Engage a mortgage broker as a first step.