Effect of Partially Settling on Mortgage due to Negative Equity

Mark_Holmes

What is the impact of having a Partially Settled Marker placed on your credit score? This is for instance if you have an arrangement put in place to partially settle your mortgage with your bank if it is in a large amount of negative equity:

1) How will it affect your credit score?

2) How will it affect any of your associate’s credit scores such as that of a spouse?

3) How hard would you find it to obtain credit in the future, i.e. if you wanted to remortgage your home on another deal or purchase a car?

4) Could it affect your existing credit arrangements, i.e. bank overdrafts and credit card limits?

5) How long would it stay on your credit file for?

[Deleted User]

It would have a major effect on you and any financial associates for the next 6 years.

I doubt you would get credit of any kind for some time to come.

CLAPTON

Mark_Holmes wrote: »

What is the impact of having a Partially Settled Marker placed on your credit score? This is for instance if you have an arrangement put in place to partially settle your mortgage with your bank if it is in a large amount of negative equity:

1) How will it affect your credit score?

2) How will it affect any of your associate’s credit scores such as that of a spouse?

3) How hard would you find it to obtain credit in the future, i.e. if you wanted to remortgage your home on another deal or purchase a car?

4) Could it affect your existing credit arrangements, i.e. bank overdrafts and credit card limits?

5) How long would it stay on your credit file for?

by partial settlement, I assume you mean you have defaulted on the mortgage debt and have no intention of paying the balance.

obviously other lenders will be reluctant to lean to some-one who doesn't repay their current debts.

The default will stay on your credit files for 6 years during which time you will find it very difficult to get any new credit.

if you are financially linked to some-one then it will adversely affect their credit worthiness too.

Mark_Holmes

Yes Clapton it would be a default on the mortgage debt and recorded as a full and final partial settlement. It is be arranged through a company who act as mediators between you and the lender. The company is called Negative Equity NI. Bought a house back with two friends in 2007 for £215k. It is now worth £85k with an outstanding mortgage of £160k. Seen a few posts about it on the forums but there is not very much to go on. We all have moved on, got married and our living in our own houses with our own mortgages. Worried that it will affect my wife and I's credit ratings badly and that we will have difficulties for instance looking for a better deal to mortgage our marital home when our 2 year fixed deal is up and getting HP for the likes of a new car. Also concerned about it how it will affect my existing credit arrangements such as overdrafts and credit cards since I do believe the banks can review your situation and go on any changes to your credit score.

fermi

Default will do the damage.

The partial settlement marker would be inconsequential or of only secondary impact compared to that.

If your reports are linked with a financial association, then that default will cause problems for them for cases where lenders pay attention to associate info.

Thrugelmir

Mark_Holmes wrote: »

We all have moved on, got married and our living in our own houses with our own mortgages. Worried that it will affect my wife and I's credit ratings badly and that we will have difficulties for instance looking for a better deal to mortgage our marital home when our 2 year fixed deal is up and getting HP for the likes of a new car.

Walking away from a financial commitment isn't viewed favourably. Even less so when you then wish to borrow even more without paying back what you already owe.