Mortgage with default

Clare_85

Hi,

Couple of questions if anyone has any advice, massively appreciated.

I lost my job in 2011 (due to injury-police force) after buying a house on H2B scheme. We really struggled and I ended up getting a default on my student overdraft (it was with RBS who we had our mortgage with and we'd been struggling to pay mortgage). We had arrears on mortgage it was moved to Collections. We paid this (£2000ish) within a couple of months and I arranged to pay my overdraft off monthly. Mortgage arrears settled in 2012 and overdraft Aug 2014. Only overdraft shows as Default even though mortgage has only just been passed back from Collections Dept also (it stayed with them until OD paid).

Anyway, now our mortgage is not in Collections we'd like to get a new mortgage deal (unsure if this is remortgage if it's for same amount or just classed as new deal, not to borrow more just see what deals are). So first question, will we be able to apply for new mortgage deals (with RBS or preferably someone else) or will we be refused due to my default?

Secondly. Ideally we'd like to move house in next couple of years. My default is dated as Oct 2012, settled 2014 (unsure if on file for 6 yrs from 12 or 14). How much of a negative impact will this have? I have a couple of late payments in the last year to phone bill (because I don't have a dd set up but thats done now) but everything will be paid bang on time from now on. Husband's credit wasn't brill when I met him but his has actually recovered now (apart from mortgage). So he looks better than I do, he earns £30k a year and I earn £8k (part-time) and he may get a promotion early next year taking him to £38k. As he earns the most and mortgage application will be based mainly on his income, will less emphasis be placed on me? Would we be better to leave me out? We would have option of him getting a mortgage with my Dad if my credit really affects us but just wondering if anyone has any idea how bad it is?

After a few years of very hard times we're finally getting back on track and just wondering how we can move forward? I'm ensuring everything is paid on time and not taking any credit out etc (have wondered about credit builder card or if it won't make a diff with default being issue).

Thank you for your time

C x



Husband & I are hoping to move house in the future

ACG

On your credit report what is showing on your mortgage?

A default in itself is not an issue, a default on a mortgage however is. Late payments and arrears showing under your mortgage account in the last 2 years is going to make it difficult to get anything better than product switching with RBS.

How much is the house valued at?
How much is the mortgage?

How much are you hoping to purchase for?
How much will your deposit be?
When are you looking to move? (1 year, 3 years, 5 years?)

Mortgage_Mark_2

As above, defaults on a mortgage aren't going to look great (they're on your credit file for 6yrs from registration).

The first port of call might be to see if RBS offer you a renewal product, as if they can, there may be no further credit checks if it's just to change product?

kingstreet

Help To Buy wasn't launched until April 2013, so if you bought under shared equity it would have been something like HomeBuy Direct, or FirstBuy.

You need to seek information from the post-sales agent for such issues before proceeding further;-

http://www.myfirsthome.org.uk/

FWIW there are few lenders who will take on a shared equity remortgage without the equity loan being repaid in the process.

I agree with Mark. A customer retention product from your existing lender might be a better idea.

Are you formulating an exit strategy for when the equity loan has to be repaid?

Clare_85

Thank you for your replies.

I ordered my credit report from Experian (and checked Equifax) and there is no default on the mortgage, it shows as 3 late payments up to April 2013 (when we cleared arrears) then up to date til present.

My RBS current account is satisfied but has a default date of 31/10/12, satisfied date 31/8/14.

Yes sorry it was Homebuy Direct. We need to look in to what to do as repayment of equity loan starts in Feb next year, another reason we'd like to move (intention was never to stay this long but job loss/struggle changed it). If I recall we had a letter saying it would be about £50 per month.

Our house cost 180k, mortgage 130k and loan for 50k. We've paid 10k of mortgage so currently 120k owed. We've not had it valued but I think it'd be around the same value now, if a little more, maybe 185k.

As regards to moving, we're not sure what's possible with this hanging over us so haven't looked into what is possible too much. There is another H2B scheme in an area we'd like to move to but don't think we'd be accepted with my credit and unsure how it works if you're not a first time buyer. Our main reason for moving is our house is 3 levels and not practical (new baby), we'd be happy to move to something of the same price on a new build scheme (if it was possible, as I said, pretty clueless here) or if we sold and bought the traditional route then we'd be looking around 150k property prices. Deposit unsure?? We're starting to save but just feel like we don't know what for as we'll just be turned down with my credit...

Thrugelmir

Given your recent chequered credit history. Perhaps best to pause for breath and get your finances into order. Rather than chase yet another dream (new property). See what RBS have to offer. If possible make overpayments on your existing mortgage. As by the time fees are factored into account. You've very little equity in the property.

kingstreet

Clare_85 wrote: »

Thank you for your replies.

I ordered my credit report from Experian (and checked Equifax) and there is no default on the mortgage, it shows as 3 late payments up to April 2013 (when we cleared arrears) then up to date til present.

My RBS current account is satisfied but has a default date of 31/10/12, satisfied date 31/8/14.

Yes sorry it was Homebuy Direct. We need to look in to what to do as repayment of equity loan starts in Feb next year, another reason we'd like to move (intention was never to stay this long but job loss/struggle changed it). If I recall we had a letter saying it would be about £50 per month.

Our house cost 180k, mortgage 130k and loan for 50k. We've paid 10k of mortgage so currently 120k owed. We've not had it valued but I think it'd be around the same value now, if a little more, maybe 185k.

As regards to moving, we're not sure what's possible with this hanging over us so haven't looked into what is possible too much. There is another H2B scheme in an area we'd like to move to but don't think we'd be accepted with my credit and unsure how it works if you're not a first time buyer. Our main reason for moving is our house is 3 levels and not practical (new baby), we'd be happy to move to something of the same price on a new build scheme (if it was possible, as I said, pretty clueless here) or if we sold and bought the traditional route then we'd be looking around 150k property prices. Deposit unsure?? We're starting to save but just feel like we don't know what for as we'll just be turned down with my credit...

If you can get a mortgage you can use HTB - Equity Loan on a newbuild. However, with recent mortgage arrears and a default, I don't see any lender offering a mortgage without a sizeable deposit.

BTW only unsecured credit commitments would show a default. The mortgage is secured, so it will show only as arrears.

Clare_85

Thanks for the HomeBuy info will have a look through.

Yeah we're back on track now, when I first lost my job we both had cars on finance and a few other bits that have gone now so our outgoings are much less and my husband has progressed/salary increases annually. However, we need to plan for the future so I am trying to figure out all of options and go from there.

We'll speak to RBS and see what they can offer currently for remortgage.

So will the arrears affect us for 6 years too? Does the chance of getting a mortgage improve over time i.e 4 years ago is better than 2 or is it just a straight after 6 years try again?

Would it help if I (defaults mine) were off the mortgage and my Dad in place with my husband? As obviously the arrears are joint.

I suppose I'm just wondering if H2B is an option at all or if we'd have to sell/buy the traditional route and what our options would be then? Have heard of brokers who will look at the whole market for you (so more chance of getting a mortgage but higher rates etc) but thinking this wouldn't be something H2B would do, even with my Dads help?

Will look into paying more off mortgage, just unsure whether we should be banking extra money for deposit/moving costs.

Sorry for all the questions, just trying to get my head around it all and then work out what is best for us,

Thanks again

kingstreet

Clare_85 wrote: »

We'll speak to RBS and see what they can offer currently for remortgage

You're an existing borrower, so it's a customer retention product, not a remortgage. Remortgage products are for borrowers new to the lender.

So will the arrears affect us for 6 years too? Does the chance of getting a mortgage improve over time i.e 4 years ago is better than 2 or is it just a straight after 6 years try again?

It varies from lender to lender when they consider the mortgage arrears "spent" just as there are lenders who will ignore a default registered more than three years ago, under £500 etc (for example)

Would it help if I (defaults mine) were off the mortgage and my Dad in place with my husband? As obviously the arrears are joint.

Who knows? Your father may be older, restricting the term creating different problems. Your partner has the same arrears record and is financially associated with you too.

I suppose I'm just wondering if H2B is an option at all or if we'd have to sell/buy the traditional route and what our options would be then? Have heard of brokers who will look at the whole market for you (so more chance of getting a mortgage but higher rates etc) but thinking this wouldn't be something H2B would do, even with my Dads help?

Assuming he owns a property, HTB won't work if he's in the picture. An independent mortgage broker would be the best route to plan your future.

Will look into paying more off mortgage, just unsure whether we should be banking extra money for deposit/moving costs

Definite questions for a broker, based on what you can do and when. Obtain all three versions of your credit file prior to making an appointment. If one is "cleaner" than the others, there may be an advantage to be gained.

Clare_85

Thank You,

Think I'll have to write all my questions down and see someone.