Is my mother ruining my ability to remortgage?

enthusiasticsaver

Personally I am not a fan of debt consolidation as it often means that credit cards are cleared, a loan is taken out and the issues which led to debt occurring are not addressed and eventually people end up with a loan and the credit card/overdraft debts again. However if you are adamant that this is the best way to go the issue with affordability is that lenders are looking to see what you have at the moment in debt and assuming that you will have this plus the new loan which is why the affordability decline is the result. The only way to address this is to go to one of your current lenders and ask them to put the loan direct to an overdraft or credit card and some are not willing to do that as they end up with less interest. Are you able to get 0% credit cards where a balance transfer is an option?


Personally I do not think the issue is your mother's bank loan if you are not named on the loan. I would be extremely wary though of being named on a bank account with someone with whom I was estranged so would also be looking into sorting that out soon even if it meant a long trip up to the town where the bank was and a conversation with your mother.

RedOktober

I'm in a better position than I was when I first bought my place ten years ago. Throughout that time my level of debt has been consistent. I've paid off one balance and run up another. Now I owe £20k less on my mortgage, earn more than I did back then, I'm nearly at the end of a ten year loan and my new payments would increase my mortgage by £50 per month which isn't a huge deal.

I do make use of 0% deals but I tend to get offered miserly limits (I presume because I already have a fair bit of credit available to me) which means I can't shift all or even most of my balances to the new card so I tend to shuffle the balances around my existing cards instead.

I do want to consolidate my debts because I'm tired of having all my money go on paying them off. I don't intend to run up further debt - if I get the remortgage I want I won't have to because I will have released a fair bit of disposable income. But I'm not that fussed about being completely debt free.

At the end of the day, I'd rather be in the position where I die and leave debts behind (which would be paid on the sale of my property) than die with a lump of savings which are of no use to me underground and not having gone on that holiday or had that life enhancing experience.;)

glentoran99

The creditors don't know you won't run up further debt though, there is also no guarantee you would use the remortgage money to pay off your credit cards meaning you have that and the extra mortgage to pay, which you can't afford and could then default

RedOktober

They have twenty years' worth of credit history to look at which would tell them more about me than my close friends know. Also the fact that it is very much in my interests to use the additional amount for the stated purpose. If lenders wanted guarantees they wouldn't lend money to anybody at all because there are no guarantees. They're in the business of taking risks with their money in the hope that it makes them vast profits overall. Plus at £50 more than my current mortgage I could afford it. And even if I do default (a big if) there's £100k equity in my property which would sell in a couple of weeks so they get they're money back no matter what. Whatever happens, a bank will not lose out by doing business with me!

RedOktober

^ their not they're. Stupid autocorrect.

Thrugelmir

RedOktober wrote: »

They're in the business of taking risks with their money in the hope that it makes them vast profits overall.

Banks use other peoples money and make a margin on it. Mortgage lending margins are only around 1% to 2%. From this there's overheads, bad debts, tax to be deducted, then shareholders dividends to be paid. Bank profits appear large until put into context of the sheer size of their lending operations.

There's no hoping either when it comes to mortgage lending. It's highly regulated and due to the low margins involved bad debts have to be minimised.

[Deleted User]

A side note: is it worth considering an LPA?

MEM62

RedOktober wrote: »

I am looking to remortgage, mostly for debt consolidation. Debt consolidation rarely works as the financial 'comfort' afforded by lower monthly payments encourages further spending. 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. The mainstream lenders probably consider that you are already over-exposed with the amount of debt that you currently have.

Except I'm not high risk. You need to realise that, from a lender's viewpoint - you are! My credit score is 972. Irrelevant - these are randomly made up numbers 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? At the moment maybe too much borrowing - hence the problem you are having taking additional borrowing.

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. This is not necessarily the issue but it is possible that it is having an impact. That would depend on your mother having a poor credit standing and you being financially linked by this account. Obtain a copy of your credit report and see if there is an association.

:eek:

In your situation I would obtain copies of your credit reports from the three major CRA's first to ensure that there is nothing untoward on you history. Then visit a mortgage broker for further advice.