First time buyer credit history advice

Kamalamrani

Hi,

I am looking at buying my first home, the house I am interested in costs £220k. I have £25k saved up for a deposit and I am eligible for the help to buy scheme which will give me a further 20% of the property (£44k) to add to the deposit, so in total £69k deposit. I work in the accounting/finance sector with an annual salary of £30k and a potential bonus of up to £5k per year.


Credit background:

I have had an Experian report, i know it doesn't mean much but i scored 781 (Fair) according to their scoring system. I had two defaults on my record, both from my time at uni. I have now paid off outright the first (£280), but it's still showing as default, and the other I am paying off (£800), should be paid off within 4 months. Other than that record is pretty good, no credit searches for over a year. Everything else is pretty perfect no late payments and I only have one credit card which has always had full balance paid via DD. Never had any loans.

My question is what are my chances of being accepted for a mortgage right now, given my current financial situation and credit background? Would it make a difference if i paid off the £800 default outright?

Also is there anything else i can do to maximise my chances of being accepted for a mortgage? I want to put myself in the best possible position before making any applications

Any advice would be much appreciated:)

Teaandtoast0124

The date the default was issued plays a hige factor. Some lenders will accept if under £500 and over 3 years old.

Kamalamrani

Both defaults were issued in September 2010 so if that the line some lenders take then i guess that a good thing for me.

Thrugelmir

What are you hoping to achieve by not repaying the defaults quickly? Do you think that a potential lender is going to look at your behaviour favourably?

Not passing judgement merely observations.

Kamalamrani

Thrugelmir wrote: »

What are you hoping to achieve by not repaying the defaults quickly? Do you think that a potential lender is going to look at your behaviour favourably?

Not passing judgement merely observations.

Not hoping to achieve anything. On the one default I have, I have stuck to the payment plan that was offered to me. Would it make any difference to my application if I stuck payment plan, which I've only got 4 payments maximum left, or try and pay it outright. If it's not going to make the slightest of difference to the lender then I might as well stick to the payment plan I have.

stressederic

Have you seen the default on your credit file? Mine says default settled but I never paid it off, and I'm currently working to get it taken off my account.

Are you dealing with the company or the debt collectors? If you are dealing with the company, I'd call them tell them you've lost your job and you want to pay the rest of the balance but on the condition they remove the default. Mine is with a telecoms company, but if it's with a bank they have procedures to follow like sending you a default notice check they have done this correctly and if not tell them to remove the default.

Thrugelmir

Kamalamrani wrote: »

Not hoping to achieve anything. On the one default I have, I have stuck to the payment plan that was offered to me. Would it make any difference to my application if I stuck payment plan, which I've only got 4 payments maximum left, or try and pay it outright. If it's not going to make the slightest of difference to the lender then I might as well stick to the payment plan I have.

Yet you have £25k of savings. This tells a lender much more about you as a potential borrower than you imagine.

Although late in the day. I would recommend you settle the debts as soon as possible. As 4 months is long enough.

nottoolate

Kamalamrani wrote: »

Not hoping to achieve anything. On the one default I have, I have stuck to the payment plan that was offered to me. Would it make any difference to my application if I stuck payment plan, which I've only got 4 payments maximum left, or try and pay it outright. If it's not going to make the slightest of difference to the lender then I might as well stick to the payment plan I have.

no it would be better to have it marked as satisfied by paying in full as soon as possible

amnblog

This is not a simple question of which lenders live with defaults. You are also seeking a mortgage for a Help to Buy Equity Loan Scheme not a standard mortgage.


The smart applicant would do nothing else before they had engaged a mortgage broker to handle this properly.

Kamalamrani

Thanks guys a lot of useful advice. I have paid off the outstanding balance on the default I had this morning and also been looking at the different mortgage brokers, I spoke to three but really like the sound of New Homes Mortgages. They charge a one off fee of £245 and also handle the Help to buy application (they made it sound like it involves a lot of chasing), anyhow I think it’s value for money. If any good brokers I would love to know about them.

Once again thanks for all the feedback, really useful.

Teaandtoast0124

Keep us posted updated on how you get on please