Mortgage help - 2 defaults

gg2011

Morning All!!

My credit rating isn't to clever. Down on poor on experian report. I also have 2 defaults on my account. (going back one 2 years ago and the other 6 months ago.

As of end of March I will be debt free apart from a O/D of £2990........

Also by the end of this year I will have 8k-10k for a deposit on a house and currently looking at the help to buy scheme

Probably not the best situation with the defaults but I never thought I'd be ion the situation to buy a house any time soon.

Any advise would be great

Candyapple

Not wanting to be the bearer of bad news but TBH regardless of you clearing your debts, I think you will really struggle to obtain a mortgage.

1. You have not 1, but 2 defaults
2. Both are still relatively 'new' in terms of age

You would be better off saving for longer, and also clearing your overdraft. If you decide you really can't wait, at best you won't be accepted for the best rates and will need to seek a specialist broker, at worst you won't be able to get a mortgage because no one will lend to you due to your credit history.

Lungboy

Why are you not including your overdraft in your debt calculation?

gg2011

Suppose I could get this paid off within 6 months but would leave me less of a deposit.......

Tixy

I think with newish defaults you will struggle particularly with the help to buy scheme.

You'd likely be looking at subprime lenders who typically will require a much higher % deposit.

Quimoi

The amount the defaults were for and whether they are settled or not play a part in a lenders decision (e.g. I've seen criteria of something like 'up to two defaults not exceeding £500, settled for two years will be judged on a case by case basis').

You can trawl through lender's criteria to see if you meet them with regard to the defaults or, as has been suggested, use a specialist mortgage broker who will know lenders likely to accept them alongside your income/loan to value etc.

I would clear the overdraft ASAP though - using it is generally a big negative to lenders who regard it as not being able to live within your means with even your current commitments.

WannaHouse_2

Following this thread with interest....in a similar situation. Good luck OP!

Blackbeard_of_Perranporth

I take the attitude of you don't ask, you don't get. Some time back there was a default on an account dating 10 year prior, and I was in agreement with current lender to freeze payment for 6 months, and move house! A national bank from the centre of London did not agree to give me a mortgage, but the mortgage advisor suggested a scam by her partner! This was after I had sorted out a mortgage with said bank in a differing town, with a director actually.


Well partners offer was 10% above interest rate and they even suggested I would not get anything better!!!!!! I voted with my feet and walked out, finding a building society not far away!


Nevertheless, on return to my friend from same bank, he enquired whether the mortgage was ok. I explained what advisor had said, and he took note. Some weeks later, on having moved my accounts due to her attitude, I found out she had left the bank, as she was continually referring people to her partner.


Advice of BoP, currently JSA, and approx. £5,000 in arrears, Walk, walk round and get them to work for you! Ask and you will get!

PWG

It all depends on the size of the defaults and when they were first registered. You are going to need a 20% deposit if they are less than two years old. Although there is a lender who will do 95% if the defaults are more than 3 years old.

Thrugelmir

gg2011 wrote: »

Suppose I could get this paid off within 6 months but would leave me less of a deposit.......

The defaults will cause you enough problems. The overdraft merely exacerbates the situation. If you wish to be taken seriously you need to clear your debts totally. Then save for an extended period while maintaining a good credit rating.

PWG

Most adverse mortgage lender don't require the defaults to be repaid before they will lend to you.