Default - will it effect mortgage chances

charlamine

House is currently on market - we have seen the house that we would like to purchase - new build - won't be released for reservation until 4/5 months time - not ready to late spring 2016.




The plan is to sell up - rent in the interim period until the house is built.
Will be applying for Help to Buy mortgage once the houses are released for reservation. We are storing 20k equity from house for deposit (which is allowing a buffer for increase in house prices)on new one, using the remaining equity to pay off all credit cards and loans, pay for fees of moving.


Will be receiving a cash bonus in August from work which will pay for moving fees the other end.


This will mean we will be clear of all debt prior to the application of the mortgage (if timings all work out!) - apart from one loan which is due to end in January 2016 anyway so before completion.
The only issue I am worried about it that OH has a default sitting on his account with Equifax for £6 with O2 in 2010. We had noticed this a couple of years back and phoned O2 to ask them what was going on as at that point we were still with them and had no communication with them at all - they confirmed it was an error on their part as they hadn't realised a credit properly so it was showing us unpaid - they would remove from our credit files - it was removed from Experian but upon checking our reports yesterday it remains on Equifax although it says the amount was settled the day of the default being registered - will this affect us with Help to Buy application? As I have heard they can be pretty strict.
Sorry for the lack of paragraphs - it won't let me put spaces in for some reason!!

ACG

It will depend on the rest of the case, if the case is ok and you get a decent enough underwriter then chances are they are going to see its human error (either yours or theirs) and not intentional or due to not being able to afford it.

But as you have a few months, I would suggest you pester the life out of them to get it removed if you can - it will significantly help your chances.