mortgage declined due to credit report

coffeepaul

Hi all, long winded but here goes, I currently have a 25k mortgage, all up to date, also have 1 cc with 600 and 1 cc with 1200, and a loan of 7500 paying 137 a month on a combined wage of approx 33000 and savings of 12k. went today to halifax asking for a 76k mortgage for a house worth 80k, we wanted a 95 percent mortgage paying a 4k deposit from our savings, we wanted to rent our current house as the mortgage was low, the advisor thought it was a good idea, she put all our figures into the calculator only for her to say we have been declined due to our credit report, Ive since looked at our reports and the wife has a late payment for next which she forgot but paid the next day, all the rest was satisfactory, Ive never had any issues getting credit so cant understand it, Ive enough savings to pay off the loan and 1 cc and still have 5 percent deposit, would this be the better route to securing a mortgage or is a bigger deposit the better route? or is it just that the Halifax are strict? im having a word with an independent financial adviser later in the week to see if he can help, any help appreciated, thanks in advance

Thrugelmir

You want to put down a £4k deposit while having over £9k of debt. Lenders won't be interested in funding your speculation. As they are carrying all the risk. Nor is the risk priced into mortgage lending.

If you wish to build a property empire you'll need to have more equity to hand.

coffeepaul

hi Thrugelmir, thanks for the reply, so do you think its best to clear the loans and cards first?

pmd123

Seems illogical to have £12k savings attracting minimal interest, while having a loan and cc debt, unless the cc's are 0%, and even then I'd pay them off before making a mortgage application.

I'd suggest you're a lot more likely to be approved if you put down a 10% deposit! and pay off the cc's, but you would be best putting this post on the mortgages and endowments boards where one of the mortgage advisors would give you some further advice.

Thrugelmir

coffeepaul wrote: »

hi Thrugelmir, thanks for the reply, so do you think its best to clear the loans and cards first?

Most certainly yes. Letting property has it's own risks (as well as rewards). So being in the best place financially at the outset is my personal view.