F&F P flag vs Satisfied debts

mattymoo2014

I am hoping to reach at least F&F settlements on my debts and wondering whether it is worth stretching to pay off in full for the sake of my credit rating with a view to getting a mortgage in the future.

I already have 6 defaults on there.

Can anyone advise what I should do?

ACG

How much will the purchase price be? How much will your deposit be?

Will the deposit be less if you clear them in full? If so roughly how much would it reduce your deposit by?

mattymoo2014

It's early days yet. We haven't had a mortgage yet. We're just tenants right now.

Yes, the deposit will go down, probably by around 10k if we settle in full. That said, I haven't had agreement on the F&Fs yet so I don't know exactly what the differential is.

As for the house value, I can't say as I don't know how much we'd be allowed to borrow. (Haven't looked into it as want to sort the credit file first.)

ACG

I cant answer your question then...

If the difference between your deposit was say a 10% or 15% deposit by paying in full or not, then I would say dont do it and try to get into the next banding (ie a 15% deposit). If the difference in a 10% or 12% then I would say it may help you by having them satisfied.

Protbably worth speaking to a broker letting them see everything and guide you.

Thrugelmir

Far better to go for full settlement. F&F may give you instant gratification but headaches in the years to come. On a number of fronts.

mattymoo2014

Thrugelmir –!could you tell me what those headaches are / might be?

ACG

Personally I think having if the choice is larger deposit and F&F settlement or full settlement and a smaller deposit, you would be better having F&F and a bigger deposit.

Lenders look at the risk to them, and the bigger the deposit the less the risk.

Thrugelmir

mattymoo2014 wrote: »

Thrugelmir –!could you tell me what those headaches are / might be?

Lenders will detect the partial settlements from your credit record. Which will influence their decision as to whether to lend to you or not. Let's just say with a finite amount of money lenders can choose their customers.

Westminster

Lenders will only detect the partial settlement on any account up to and not beyond 6 years from the default date. After this time it is as if the account never existed.

Obviously this is different if you are applying for a mortgage with one of the companies you previously defaulted with.

kingstreet

ACG wrote: »

Personally I think having if the choice is larger deposit and F&F settlement or full settlement and a smaller deposit, you would be better having F&F and a bigger deposit.

Lenders look at the risk to them, and the bigger the deposit the less the risk.

Yep, as a broker I have to agree with this.

There are times when repaying debts and reducing the deposit will see the applicant shoot themself in the foot.

It may be unpalatable, but it's true. Fully repaying a debt at the wrong time may see you extend the period before you can apply for a new mortgage unnecessarily.

mattymoo2014

That's really helpful, thanks. Is there a list of reputable / good mortgage brokers who specialise in clients with an adverse credit history?