big deposit, but bad credit

georgegreen

hi every one new here,
im after a little bit of advice, i have an awful credit score, loads of previous defaults etc as does my girlfriend who a few years ago had a DRO. her father recently died and she has come into about £90,000. i am a builder so property development seems the obvious choice. we can buy a DUMP of a house in our area for about 110,000 and would look at keeping costs to a minimum and me doing the work look at spending at a guess 20,000. we would need to get a mortgage, but given our circumstances would this be possible? so say a £40000 mortgage. any ideas where we would start. thanks in advance, george

ACG

A broker who specialises in adverse.
Im sure with that level of deposit something can be done, but it will ome down to the details and more importantly the dates.

Elpaso2011

As above, a broker will be able to look at sub-prime lending. That's where you may be offered a mortgage but at a rate that isn't prime, for example someone with a good credit history may get a mortgage rate of 4% they may agree to lend to you but at 6.5%.
Again dates are important.... Some
Lenders may only look at the last 6 months of your credit file whereas another lender may look at the last 6 years.... Again a mortgage broker would have a matrix of all the lenders they introduce too and their criteria's.
Another thing is, Halifax, for example may use the credit referencing agency equifax, and nationwide (for example) may use experian or call credit, so depending which referencing agency's your defaults are registered it may not even come up.
theres a few things to remember too;

If you chance it and go to a lender and request a mortgage, they will do a credit check on you... Let's say the first one declines ... So you go down the street and try a different lender .... They will be able to see that you have recently had another search done on your credit file that was declined.
As well as lender checking your credit file for defaults etc they also check for previous searches for credit (such as a loan for a mortgage) as well, most lenders don't like seeing more than 2 searches in the last 6 months .... This is because it suggests that other lenders are declining credit and/or someone is desperate for credit so could mean spending beyond their means/in financial difficult etc .... It's an alarm bell for lenders.

So it's best to do you research on lenders criteria's before you decide who to approach for a mortgage, sometimes it's good to then speak direct to the underwriters of that company and see if they feel that it's worth you putting in an application.

If your looking to develop a property then think how long this may take you, and don't sign up for any fix rate terms that may mean you have to pay a hefty early repayment charge (ERC) should you want to sell before the fixed term comes to and end .... And think logically too, your more than likely going to have to pay a higher rate with adverse credit but if your going to be making some decent equity then this will be worth it, just make sure whatever you are buying will be easy to resell and the price you want to be asking is realistic for the area and be easy to resell in a decent time period ... You can't polish a turd but sometimes there is not point totally smothering it in glitter either !!

There are loads of other ways you can help repair your own credit too.... Like making sure your on the electoral roll where you live , been at the same address for 3 years at least (some lenders like 5+ ) if your self employed , again at least 3 years books (some like 5+ and forecast) making sure you don't have too much credit, for example 5 score cards all with 0 balance but still open, call them and cancel some, but also be aware lenders do like to see that you some form of credit that you are managing well so it may be worth getting a credit card if you have none now and say , pay your petrol on it and pay it off straight away when you get home for a bit.

If you have anymore questions then I will try answer them for you. I have worked in debt collection since 2016 for an unsecured debt collection company and I am now a training and development coach for mortgage debt, so I don't know everything inside out but I am quite clued up or could probably find out for you if I can.

Sometimes financial advisors offer 'free' consultations and will give you independent free advice , and the introducers (brokers) that work in estate agents are mortgage advisors so are (should!) be fully qualified to give advice to help you make an informed decision.

Good luck in your new chapter !!

Elpaso2011

Sorry I was supposed to put worked in debt collection since 2006 not 2016 !!!!

Also forgot to mention ... Say the house is worth £100,000 and your asking to borrow £40,000 then your LTV (calculation of what the loan is worth to the value of your property) is going to be 40% which is not really a risky lend ... It would be highly unlikely that if you defaulted on the mortgage and the lender took possession the threat they wouldn't get there £40k back is low ,so I personally think your in a good position ,

Plus you say your girlfriends debt was a few years back ... If it's over 3 that puts you in a better light with some lenders
As for yours being shocking , go on equifax and check because where concerns flash up it will mark it as red and give you link to suggestions where you can improve it ....
If your debt is over 6 years old it may also be statue barred (think that's the right terminology!) which means that collectors can only request that you pay it on a 'moral obligation' and not legally enforce any action and you may even find in this case that it no longer appears on your credit file.

ACG

There are a few things not quite right but in the main I think it covers a lot.

Elpaso2011

Yeah, I have only worked in the 'when lending goes bad' and not in the 'before lending stages/criteria' so it's only stuff I have heard, so apologise if any of it is wrong !!

georgegreen

thanks a lot, we really appreciate it