Mortgage & Historical Defaults

nayfeee

Good afternoon,

I am just looking for some advice and opinions on my current situation.

My partner and I are hoping to purchase our own property in the not so distant future. However, I am not expecting that it will be very easy for us (me) to find a mortgage provider.

I have been trying to read as much information as possible and appreciate that there's no definitive answer as it depends on particular providers, but I'd like some advice and some opinions on what our chances are on finding a mortgage.

My partner, although her credit score is low, has a "clean" credit history. She has never missed any payments and has always paid her financial obligations on time. She has had a fair amount of credit in recent years with a loan, car finance and a couple of credit cards and some smaller purchases such as furniture etc. Recently she has paid off the majority of her debt (credit cards, loan, sofa on finance etc. have all been fully settled) and now has much, much less credit -off the top of my head she has a car on finance, a few hundred pound O/D and a couple of mobile phone contracts. She also has a joint car finance with myself.

My own credit history is what is concerning me the most. I have had several defaults in the past. On my credit report I currently have four outstanding totalling just under 2,500. Two of them defaulted in 2013 (£97 & £244) and two of them in 2011 (£105 and £2038).

This past week I have paid off the three smaller debts in full, so hopefully they will show as "Satisfied" on my next updated credit report.

With the remaining of my defaults being a considerable amount of money, I would like to know if paying it off will increase our chances of getting accepted for a mortgage?

If all of my defaults are satisfied, and we meet affordability requirements, would any provider consider lending to us with my adverse financially history?

Any help would be great as this is causing quite a lot of stress at the moment as we would really like to progress with this but are not sure if we are wasting our time.

Many thanks,
Nathan

ACG

When in 2013?

I think because of the number of defaults you would probably be better putting that money towards your deposit. With a 15% deposit there is likely to be options now, probably not on the high street though.

If you paid them off there is a chance you would fit criteria with high street lenders but I am not so sure you would pass the credit checks.

You need to get all 3 credit reports down to a good experienced broker really.

nayfeee

Thank you for replying.

Apologies I have made an error in my original post - the two defaults were in January of 2014 and not in 2013.

Are you suggesting to not pay the £2k default and instead add that to our deposit?

I don't like the idea of having a large debt hanging over my head when I have the mean to clear it, but are you saying it will in fact be better to have a larger deposit with 1 outstanding default than to have a smaller deposit with them all satisfied?

I have already, this week, paid off the three smaller ones (two from 01/2014 and one from 2011).

Thank you again

kingstreet

Getting the defaults to three years old or more and increasing your deposit is a better bet then satisfying a default.

Lenders who will accept you, don't care if the default is settled or not but they do demand a higher deposit.

ACG

Im not suggesting anything.
Im just stating that if you have a 15% deposit there are lenders who will look at it whether the defaults are satisfied or not. The bigger the deposit the more likely you are to be accepted and potentially better rates (if you get to the next banding).

Morally, the answer would be different but this is a forum for help on obtaining a Mortgage not getting through the pearly gates.

nayfeee

Understood. Thank you for the advice guys much appreciated.

kingstreet

I agree with ACG. There are plenty of people who will tell you to pay your debt first.

However, they are not the ones wanting a mortgage sooner rather than later.

You will need a larger deposit before you will need a "satisfied" gold star on your credit file. Do you know that a default my not show on all your credit files and if it doesn't show up on the file of the CRA used by a particular lender, it won't be taken into account?

So, get all three versions of your credit files and put them in front of a broker before mis-timing any more moral gestures.

Liverlad67

There is a company called precise mortgages. Available via broker only. They accept defaults CCjs etc as long as over few years old. They want a t least 15% deposit more if you can afford it. Charge about 1% more than normal rate but small price to pay for being naughty in the past. Have a look at the website may be of use to you.:beer:

Thrugelmir

A default of that size may come back to haunt you. Particularly if the debt gets sold on to a DCA.

nayfeee

Thanks for the responses.

That particular debt has already been with a DCA for a very long time.

Plenty for me to think about here and looks like I may have to go back to the drawing board for a while.

Thank you

nayfeee

Hi everyone, thanks again for the input above.

I have been regularly checking my credit reports since paying off some of my defaults.

The two from 2013 have completely vanished from both Experian and Equifax, there is literally no trace of them on there. Not under closed accounts section, not anywhere. I can only assume that as they are utility accounts they have been removed?

The smaller one from 2011 has been updated to show a satisfied date.

I have been in touch with a broker and he suggested that waited until my credit file had updated and contacted him again. I will contact him again on his return to work next week.

I was just wondering, will this now open up more options for mortgages now that I only have defaults from 2011 showing on my reports?

Thank you