Defaults - Buying a house

Rose1988

Hi all,

In 2012, I was rush to hospital with a critical illness with a 50/50 chance of survival. It took me having 12-18 months off work to recover with daily nurse visits and regular hospital visits in that time.

I incurred 8 defaults this year because no one had access to my accounts although my then ex partner was able to speak to my landlord and pay my rent on my behalf (we were not living together at this time). At the time, I was unable to communicate but with therapy, I was able to start speaking again and writing and was able to speak to lenders and get plans in place. The total value of the defaults would be around £6000

All defaults are paid in full and unfortunately, I have to wait 6 years now before we can even buy a house.

My question is, how long before you have a chance of being accepted for any credit applications because if there is a chance to buy before 6 years, I really would like to do this.

I am seeing posts where people state that brokers may be able to ignore 'old defaults' but what is classed as an old default? Is it just best to wait the full 6 years and then buy?

CKhalvashi

Someone will be along with more advice, but from my limited understanding, it's also about risk for the lender.

If you have a potential borrower with 8 defaults all paid and 50% deposit, you're much more likely to lend to them than with 10% deposit.

There are brokers on the site, and they will be able to advise in much more detail than I can.

Quimoi

I think that lenders look at the age, number and amount of defaults as well as whether they are settled. The examples I've seen for 'acceptable' or 'judged on a case by case basis' are something like up to two settled defaults, over two years old and not exceeding £500 each. Bluntly, I would think with 8 and for £6k even settled you are not going to meet lenders criteria until they start dropping off your file 6 years from the date of default.

Not wanting to give false hope but have you written to each of the lenders, explaining the circumstances which led to the default, pointing out that they are settled and asking whether they would consider removing the defaults because of the extraordinary situation?

In any event, good luck and most importantly good to hear that you have come through what must have been a horrendous time

Rose1988

Thanks for your responses. I did attempt to look online for precedence because I did not want to waste my time writing in but I eithet have poor googling skills and didn't look properly or there was nothing out there.

I think maybe I will look into writing in as I have nothing to lose at this stage.

I thank you for the advice so far, no matter how blunt, it allows me to realistically plan ahead. Worst case scenario, I will continue to save for the next 3 years which will just mean a smaller LTV Mortgage in the future, it would have just been nice to buy sooner as my rent payments are higher than the potential mortgage repayments

ACG

Lenders typically go off the age of the default.

With a 15% deposit there are 1 or 2 lenders who would consider 12 month old defaults (satisfied or not) but at a rate of around 6%.

Once they are 2-3years old and you will have more options at higher LTVs and/or lower rates.

However, if you were to find a good experienced broker and they have relationships with some of the smaller lenders (such as building societies), it might be possible to get you something more reasonable under the circumstances but I suspect you would probably need a 25-30% deposit for that.

Hazzinho

To be blunt these are businesses and they don't care about personal circumstances, they'll see the defaults and say no.

Not trying to be harsh there just being honest, glad to hear you have you health which is more important than any mortgage. Good luck in the future!

ACG

Hazzinho wrote: »

To be blunt these are businesses and they don't care about personal circumstances, they'll see the defaults and say no.

Not trying to be harsh there just being honest, glad to hear you have you health which is more important than any mortgage. Good luck in the future!

Thats not true.
Larger high street banks are like that as they get hundreds or thousands of applications daily and they do not have the time to look into the details of why there were problems.

Smaller lenders (building societies/private lending groups) can take a more personalised underwriting approach. Thats not to say they will accept you, but their criteria is much more flexible.

stator

You might want to add a note onto your credit file to explain all the defaults. If you put them on there the underwriters will have to read it before they make a decision.

ACG

Noooo, dont do that either.
Notice of corrections do nothing what so ever.

I have known cases that would have flown straight through get thrown out by the system because it can not comprehend NoCs and so it then gets passed for manual underwriting - not a major issue but it slows things down.

Lenders will ignore them anyway (I have worked for 2 banks in both mortgage and credit cards and both completely ignored NoC's) as they have no way of verifying whether its true or not. If they want an explanation they will ask for one.


Seek professional advice from a broker. It might be you have no chance for 12-24 months but atleast they can tell you and put you on the right path and how to plan for it.

Rose1988

I see, thank you for that.

I currently have a 20% Deposit, so if I 'do' really have to wait, I am sure this will be raised to 30% in 3 years time.

I will take your advice and speak to a broker first and then take it from there. Worst case scenario is; the longer I have to wait, the bigger a deposit I can save.

Thanks all for your input

Brightspark87

have you asked on the mortgage board? They were such a help to me