Partner has poor credit rating, whats the best option

keeer

This has been asked a million times before I'm sure, just the advice is usually mixed:

I have a large deposit (50k) and have a decent income (lets say 40k), partner has no deposit and a good income (lets say 30k), she's also working towards a PhD and has some guarantee that her income will top mine in the next 5 years. No issues thus far, except her credit rating: As a couple we could borrow 310k, with her credit rating we can borrow 0 from most lenders, her debt has been paid off for a year now. We've seen a home we like for 250k total, which gives us a few choices at this point:

Get a 30 year mortgage and lend money from family (not a nice option in my opinion), get a joint mortgage with a mortgage provider which specialises in bad credit (at least for 2 years, then look at remortgaging with a better provider), wait 1 year for her credit rating to "normalise" or buy a home as an investment and work on it for a year then look at upsizing.

ACG

I think those are your options.

But having adverse does not necessarily mean you need an adverse lenders.

Caladan

Maybe need more information? If your partner had CCJs/Defaults etc then it is a completely different story to if she just missed a few payments or took ages to pay the debt off/stayed close to or over limits.

ACG is spot on though - You've basically listed your main options, but (depending on the above) you may be underselling yourselves.

Also - If you DO borrow money from friends/family you can always re-mortgage later once you're in a better position and pay them off.

Also also - Be cautious with buying a property with the intention of 'doing it up and selling for a profit.' A lot of people overestimate how much value they add by doing this and you may find you spend £20k on home improvements only to find £5k worth of added value on sale, or even worse, none.

keeer

I believe she defaulted twice 5 years ago. Are there any recommended mortgage providers who won't charge ~8%? Ones who may give her a bit of a break, it's so annoying - as an individual I'm literally 30k away from the target! As a couple (with a good credit rating) it's well within our reach.

Thanks for your help so far, it's made me feel slightly more optimistic

audigex

If her only issues were defaults 5 years ago, I'd wait 12 months for them to drop off her record and you should find it an absolute breeze to get a £200k mortgage on your combined income.

You could do it the hard way now, but I think I'd just wait in your position: buying and moving house is stressful enough even without having to mess about because of poor credit.

Are you in a hurry to move? (Other than "I want a house!" impatience, as we all suffer once the idea enters our head )

keeer

Just a quick update to this, I found out from her she joined stepchange for financial help, this is what I paid off last year.

ACG

I would say even with a non high street lender you are unlikely to be paying more than 4-4.7%.

If a broker comes back with anything remotely close to 8% then they are probably using a sledgehammer to crack a nut. As I said, high street rates may be an option but it will come down to the finer details.

keeer

Sounds like we need a new broker, this wasn't considered an option for us. Care to recommend any good brokers who could help in our present situation? I've got a call with nationwide today and I'm gonna ask them for advice and probably get a 180k aip,

At this moment in time we've started looking at smaller homes, but if something larger is still an option for us - that would be my preference.

Thanks for all your help so far, it's been really useful!

ACG

That could cause more harm than good.
Your contending with some adverse, you do not want to do anything that may risk your credit scores further.

I can not recommend brokers/lenders but if you call around a few have a chat with them and see what they say. It could well be that you have no hope combined with the high street, your current brokers knows more than we do. All I am saying is based on your posts alone I would not rule it out.

Thrugelmir

keeer wrote: »

Just a quick update to this, I found out from her she joined stepchange for financial help, this is what I paid off last year.

Not just defaults then. Been in a DMP. You should establish the finance companies involved. As may well restrict the options available with regards to lenders. Once bitten twice shy applies here.

keeer

I've spoke to my partner about this a bit more, I suspect her unstable employment may also be a critical factor with regards to employment (she's doing agency work at the moment before the paid bit of her PhD begins). So I think it's going to be much easier to rule her out of the whole equation.

We've been looking for cheaper houses and I'm sure she'll be able to maintain paying half the mortgage to me directly and we can look at getting a joint mortgage once the fixed term ends (or upsizing). I've managed to get a decision in principal (180k) so we're good to go now.

I really appreciate all the help, I have to say that our broker wasn't much use at all and not only gave us false hope (in terms of potential borrowing) but also didn't give many realistic options for us and then the final nail in the coffin was choosing to ignore us once my individual application for 200k was denied (as I suspected it would be after going on numerous "how much could I borrow" webpages).