Defaults on mortgage application?? Help!

lisajane12345

Hi all

I am looking to apply for a mortgage toward the end of the year with my partner,

I have a slight concern about late repayment marks on his file. There are no late payments showing on his account since mid-2012, however, I am wondering if this may still lead to a declined application? (There was in total approx 4 separate late payments across two separate mobile phone contracts prior to 2012.)

Is it possible to counteract bad credit by building a positive history with a credit card, or will it take more than that?

Also, are you more likely to be accepted by a mortgage lender with whom you have a more positive financial history with? Basically, what I'm asking is would it be preferable to switch credit cards/savings etc to the chosen mortgage lender?

Thanks

WillyWonga

First of all clear as much debt as possible and go in with a decent deposit. With a history of PDL and some defaults the only real way is a sizeable deposit - at least 15%.

Dont go alone in applying for a mortgage - go to a broker. They will place you with the best lender for your circumstances. There are some banks which detest PDLs and others who are more lenient. They will know which one to aim at first.

Banks are unpredictable. I read once about a bank turning someone down because they had the odd flutter with an online bookies which appeared on their statement. They saw him as a "risk"

Dont take anymore credit. Clear what you have and build on the deposit.

jamesd

Assuming that the late payments were under £100 or so worth each time it'll be three years since they happened and that'll be acceptable to most lenders, though probably not the most selective like First Direct, who like a truly spotless record.

The negative can't be directly counteracted but the establishment of a positive on time record can help to improve the overall picture. I deliberately used a personal loan and credit cards to provide a perfect on time repayment record for two more types of credit.

Your affordability situation matters, so use the affordability calculators offered by various lenders to assess your situation. If affordability looks good you can improve your loan to value by deliberately using 0% for purchase credit cards to defer spending until after the home purchase is complete. The lower LTV can improve your appearance to lenders if affordability is OK and the likely lower interest rate from a lower LTV can safe you a lot of money.

Lenders can have some preference for customers who they have ha dad a long term relationship with, since they can see more of their spending history and financial habits. You don't have time to make a useful difference in this area.