Default Advise

NorthernMoney79

Hi All,

New to the forum, after reading all the good advise and pointer thought I would join to help and the wife on our 15 month journey to a new home.

We are in the process of finally repairing our credit rating so we can apply for a mortgage middle of next year, question is we have 2 defaults (1 each left on our credit score). We are now in a position to pay them both off in full which is £4000, both these have agreements in place of small monthly repayments set up and we are up to date with those payment. We have been contacted by both offering us settlement figures which are much lower than the actual total, but I'm told this will still show on my credit file as not paid in full?? Can anyone tell me will this hugely effect our mortgage application next year if we clear the balances but take the deal being offered?

Thanks

sourcrates

Hi,

The defaults will show for 6 years regardless, unpaid, settled or partially settled, makes little difference.
It will depend on the acceptance criteria of the mortgage lender as to wether they accept your application or not.

As a general rule, the further back in time negative information is, the less relevant it becomes.

NorthernMoney79

Hi,

Thanks for getting back so quickly, is the 6 years from the date of the default or date of payment?

Puzzcat

NorthernMoney79 wrote: »

Hi,

Thanks for getting back so quickly, is the 6 years from the date of the default or date of payment?

Date of the default..disappears 6 years later.
Puzz

NorthernMoney79

So we may as well take the deal and pay off the smaller amount as we are stuck with the defaults weather we pay them off in full, at the deal or not at all is that correct.

blisteringblue

NorthernMoney79 wrote: »

So we may as well take the deal and pay off the smaller amount as we are stuck with the defaults weather we pay them off in full, at the deal or not at all is that correct.

Absolutely, if the account is showing as defaulted and they have offered you a deal to settle accept that, paying it in full will make absolutely no difference to your credit file. After 6 years from the default date it will drop off.

If it hasn't defaulted yet then paying in full may be slightly better for your file, but it will still show any late payments or arrears etc, but the file will show fully settled and no default.

NorthernMoney79

Thanks for the advise and quick responses just got off the phone and they are going to consider my offer to pay 50% which will be a big help, but the default being on our file until Dec 17 may now be an issue of the mortgage application next June ahhhhhhhh!!!!!!

KirstyO

Don't stress too much about mortgage with a default. I have one on my file which will be there until 2018 and I was approved for a 95% mortgage with a high street bank in October 2015.


Of course this does not guarantee that you will be accepted as everyone's circumstances are different. I'm fortunate that my horrific debt period only ended up lasting 3 years, so my run of late/missed payments was short and now nearly 5 years ago (it took them a while to stick the default on, but nearly up to 4th anniversary!).


My best advice when it comes to applying for your mortgage is to find a whole of market broker and be honest with them, they will know which lenders regularly accept people with adverse credit history. My broker also dealt with the legal aspects of the sale for me too and as a single first-time buyer with no family nearby, I think his help and advice were a bargain at £349 (then I got £100 cashback!).


There are ways and means, and as others have said the older the negatives, the less they matter. Financial organisations seem to be increasingly aware that people can change their attitude to their finances over the space of a few years

McKneff

As forthem offering and accepying, make sure you get everything on paper