£12k default and FTB mortgage

uwecat

Hi everyone,
I am after some advice please. I have a default back in August 2011 for a car loan of £12k, I have been paying £1 token payment since. My credit has been perfect after the default, no late payment etc as I've learnt my lesson. Fast forward to today, I want to get on to the property ladder and have 13% deposit, but I am struggling to get a mortgage due to the amount is still outstanding and I am thinking of offering them a partial settlement.

However, I've also read somewhere online that a default is a default, doesn't matter if it's settled or not it will still stop me getting a mortgage. Any advice please?

National_Debtline

Hi there, welcome to MSE.


A default will cause some damage to your credit file but I cannot say if that alone would stop you getting a mortgage because each bank will assess you for credit against their own criteria. What I can say is that an outstanding default is more negative than a settled one (but the default will be on your credit file for 6 years from the date of default).


A partial settlement can be positive and negative to your credit file because it will show future lenders that you settled the debt but that you didn't pay the full amount (it will not say how much you paid). So settling this in full would be the most positive thing you can do to your credit file - but whether that would be enough for a mortgage no one can say. If you want to do a partial settlement then make sure everything is done in writing before sending any money. We have a sample letter to help you - https://www.nationaldebtline.org/EW/sampleletters/Pages/Full-and-final-settlement-offers-(sole-name).aspx


Laura
@natdebtline

tomtontom

Why are you only making a token payment towards your debt when you can afford to pay it off? Token payments are for those in financial difficulty, not for you to save elsewhere!

andyfromotley

Ask this question on the Mortgage Board, one of the brokers there will advise you.

Tyrone_Black

tomtontom wrote: »

Why are you only making a token payment towards your debt when you can afford to pay it off? Token payments are for those in financial difficulty, not for you to save elsewhere!

I'm all for people telling predatory and unscrupulous lenders where to go but car finance?! Pay what you owe!

worried_jim

Offering £1 on a £12k debt and now want a mortgage! Are the schools on holiday or is it April 1st. Troll.