Is my mother ruining my ability to remortgage?

RedOktober

I am looking to remortgage, mostly for debt consolidation. The new mortgage would mean I would be committed to paying out several hundred pounds less per month than I do now (and have been doing so for the last five years) but three lenders have already turned me down on 'affordability' grounds. So I thought I'd see if a loan might be a better option and used one of those loan egibility calculators. The only results that came back were from the companies nobody's heard of with high interest rates and who specialise in high risk.

Except I'm not high risk. My credit score is 972. My credit history dates back twenty years and is an ocean of green with different types of borrowing: mortgage, credit cards, loan all paid on time with no problems ever. Surely I'm just the sort of person lenders should want, right?

However, my name is on a bank account with my mother. She lives 150 miles away and this is her account: I don't do anything with it at all. A few years ago she was diagnosed as terminally ill and so had my name added to her account so that when the inevitable happened I would have access to her funds without having to go through a bureaucratic nightmare while I'm busy grieving.

My mother took out a £20k loan and about five or six years ago defaulted on it as the person who was helping her pay it off (not named as a joint applicant) died. She has since been paying it off at around £50 per month. Could this be the reason why I'm being declined? If so, can I get a notice of dissociation because we are not financially linked for practical purposes? What other options are available? I think I can only get my name off the account if we both go to the bank. But she has mobility issues and we are currently estranged (don't ask) and I won't be in the town where she lives in the near future.

:eek:

CKhalvashi

The issue could be that you're financially linked, however assuming your name isn't on the loan, this shouldn't be too much of a problem.

If your name is on the loan, and has defaulted, then this could be a big problem.

The main issue at the moment is people are being told they can't afford a cheaper deal, as a result of new regulations in the UK, which are much stricter than in the EU as a whole.

redpete

RedOktober wrote: »

I'm not high risk. My credit score is 972. My credit history dates back twenty years and is an ocean of green with different types of borrowing: mortgage, credit cards, loan all paid on time with no problems ever. Surely I'm just the sort of person lenders should want, right?

But at the beginning you wrote...

I am looking to remortgage, mostly for debt consolidation. The new mortgage would mean I would be committed to paying out several hundred pounds less per month than I do now (and have been doing so for the last five years)

So you've had sufficient debt for at least the last 5 years to be paying several hundred pounds a month but don't think lenders would think twice before lending you more money?

Have you worked out the total amount of interest you would be paying out if you take out what is presumably a long-term mortgage to replace the CC/loan debt you have at the moment?

RedOktober

It's several hundred pounds because I choose to pay considerably more than the minimum payments.

And yes I do think I'm attractive to lenders - somebody willing to take on debt which earns them money from the interest charged with a pretty much zero chance if default.

I've done the calculations and a remortgage would be the financially wise thing to do to consolidate my debts. I'm only looking for an 18 year term at a 61% LTV ratio and would be moving onto a better interest rate than I'm on now

Gaz83

RedOktober wrote: »

It's several hundred pounds because I choose to pay considerably more than the minimum payments.

And yes I do think I'm attractive to lenders - somebody willing to take on debt which earns them money from the interest charged with a pretty much zero chance if default.

But considerably less money than they would expect, if you're overpaying. Perhaps lenders don't want to touch you because you don't make as much money for them as they'd want.

redux

RedOktober wrote: »

I'm only looking for an 18 year term at a 61% LTV ratio and would be moving onto a better interest rate than I'm on now

Away from the main subject of your query, I'm no mortgage expert, but I've noticed that some providers have slightly better rates starting at 60%, might save a few quid a month.

Back to the topic, I do wonder if the ratings are mainly about you and the amounts on the current loans, and of course when assessing affordability they don't necessarily know you would be clearing those.

Ben8282

I hold a Third Party Mandate on one of my parents accounts due to their failing mental abilities but this is not a joint account and does not create a financial link. You will have to check your credit report to see if an association has been created. If it has and you want to disassociate yourself you will have to have your name removed from the account. Perhaps you do have a joint account rather than a TPM? If there is no financial link then your mothers unfortunate situation cannot be affecting you.
Personally I believe the most likely cause of your problems is high balances and questions with regard to the affordability of your new higher mortgage repayments.
As an aside, I feel very uncomfortable at the idea of replacing unsecured credit card debt/loans with a consolidation loan secured on your home. Please think this through very carefully. If you default on a loan or credit card you will be in the same position as your Mother. If you default on the mortgage you will be homeless.

m4rc

Would it be a good idea to talk to an independent broker maybe? Just wonder if they could look over your current situation and give you an opinion. If they see an issue then you have your answer, although if they say it looks fine maybe they could try and place it for you.

Mojisola

RedOktober wrote: »

It's several hundred pounds because I choose to pay considerably more than the minimum payments.

If you can't afford to pay off the full amount every month you should be looking at ways to reduce your spending.

mcpitman

Affordability calculations any lender will use, will include the repayments of the new loan on top of the current commitments.

This is because they have no guarantee (apart from your word) that you will pay the other debts off.

Therefore they have to look at a potential scenario where you borrow your consolidation money, not pay any of it off and then have to afford all the repayments.

With reference to any form of "credit score" ignore it, thay are broadly nonsense.

If you are named on any bank account with someone else there will be a financial link to that person, therfore if they have defaulted this could affect your ability to gain credit.

Thrugelmir

RedOktober wrote: »

And yes I do think I'm attractive to lenders - somebody willing to take on debt which earns them money from the interest charged with a pretty much zero chance if default.

From the lenders perspective a better risk is a new borrower with no debts. Than some one wishing to consolidate existing debts. The issue for the lender is that you have accumulated a sizable amount of debt. The reason why is of no great interest. The concern will be that you may do the same again. As statistically that's what happens. All down to human nature and how we are born. The best way to for someone to learn the lesson. Is to resolve the problem themselves. Nothing better in life than experience not to repeat the same mistake.

Try the Debt Free Wannabe board for advice. You may be surprised how hard people work and the lengths they go to in order to clear their own debts.