First time buyer with an odd question.

funkysi

Hi all,

I have searched for this topic, but it has drawn a blank. I'm close to applying for a mortgage on my first house. My credit score is good with no negatives, I have a good amount to put down as a deposit and I will also be taking part in the government's help to buy scheme. In addition, I earn a reasonable salary and my own bank has soft searched me for a mortgage and it was accepted to a figure I want.

All looks good doesn't it....except for one thing.

About 15 years ago, not long after finishing university, I got into a bit of debt with my old bank. Some of it was referred to debt collection agencies, my main one being a bank loan. Now this has long since vanished from my credit history, but I have a standing order that I've been paying to them for quite some time now, never missed a payment, never had an issue and this will just carry on until eventually it gets paid off.

Would this be something that the mortgage lender would see and have an effect on? My outgoings are fairly healthy in relation to my income and the obvious question would be 'pay that old debt off'....well, I would like to have that money retained as a deposit so that I could pay the rest of after the house purchase.

Recapping: Good credit score, soft search shows mortgage acceptance with my bank, healthy deposit for a house.

Question: would an old historic standing order that is still being sent each month to a debt that is no longer registered on my credit file make any difference and would I even need to disclose it?

ACG

Just declare the monthly payment as a commitment. Based on what you have said it does not appear on your credit report as a negative and so you should be fine.

Senior_Paper_Monitor

A standing order/direct debit to lowell portfolio or similar is likely to attract an underwriter's attention in my opinion

ShakeItOff

When I applied for my mortgage, I had to provide bank statements to the broker, which I assume went to the lender. I was never asked what any of the commitments were for specifically, so I wouldn't have thought it would be a problem.

ACG

SPM raises a good point. The name may be a give away.
I think the other big one is merlin.

If the name is a give away you need a lender who does not ask for statements or uses the statements as a tick box exercise (checking wages) rather than reading through it in any detail.

funkysi

Thanks for the replies chaps. My two are Cabot Financial and Westcott.

funkysi

If there's any advice on the best plan of action based on what I've disclosed, then that would be great.

Thrugelmir

Settle the debt. As SPM says underwriters will be aware of what Cabot Financial and Westcott. And put 2 +2 together. This will tell them a lot about you and your attitude to monetary affairs in terms of a profile.

ACG

If you want the choice of lenders you are going to need to pay it off and hold fire for 3 months bank statements.

There will be lenders who will do it as is but your choice will be reduced and I would suggest speaking to a broker who will guide you down the right path.

funkysi

Thanks for the information everyone.

I have called My creditor and negotiated a 70% discount which will be paid in full.

Now the loan that the debt is attached to was a loan from 2003. I understand that I will be now partially satisfying that debt, but would the recent payment bear any reflection on my credit rating? Would a lender see that this had happened? Would they even go back as far as 2003?

For reference, I will be submitting a mortgage application in January (build completion is likely to be May).

itsdagal

Hi funkysi,


The debt cannot be re-added to your credit file so this should have no impact - though I would recommend checking your files to be sure in say a months time.


A good example of the boards working here - good question, good advice and sorted in time to allow for future checks before application.


Pats on backs all round :-)