Broker or direct? FTB

mildredalien

Just looking for some advice about approaching the mortgage as a FTB.

My husband and I have not had the cleanest credit histories - mine is pretty good now (a default dropped off last year) and financial behaviour has been clean for a few years, no late/missed payments, no loans, staying way under credit card limits etc.

My husband had a slightly worse record including a bunch of payday loans which date back to around 2011, and settled his last defaulted debt last year. The default itself drops off his credit record in a few days and the only reason he didn't settle it earlier was that he was told by his debt management company that they'd included it when they hadn't! Anyway, he does have a couple of loans but no issues with making payments or receiving charges for a number of years.

We have a 10% deposit and the amount of mortgage we would be applying for is well within our affordability (payments would likely be <25% of our combined income)

So my questions:

1) How quickly will the default come off my husbands record? The 6 year date is 15th March - will we have to wait until credit companies update their records or would it be off by 16th March if a lender was doing a credit search? We're pretty much in a position to buy now but want to get a DIP before we start viewing to smooth the process.

2) While recent years have been much better in terms of financial behaviour, given there have been issues in the past would it be better to go through a broker? We have found one nearby with good reviews on Vouched For, whose fees seem reasonable - we've got a phonecall with him on Monday so we can ask about whether he is independent/whole of market etc.

4) I'm an HSBC advance customer so may be able to access a decent mortgage deal through them, but I've heard that HSBC generally only do direct deals not through a broker. Is that right? Should we speak to HSBC first and only go through a broker if we have problems? Would being rejected by HSBC then impact on other mortgage applications?

Any advice appreciated!

csgohan4

You need a broker who deals with adverse credit


Going direct will waste your time as you don't know who will be more likely to accept your sitution

mildredalien

csgohan4 wrote: »

You need a broker who deals with adverse credit

Going direct will waste your time as you don't know who will be more likely to accept your sitution

Thanks - I thought this might be the case. I suppose I wasn't sure what counts as adverse credit when it comes to mortgages. By the time we apply there will be no defaults on record but it will show a number of settled accounts.

The only lender/s we'd go direct to would be ones we have banked with for a number of years and have a proven record but I don't know if that would make a difference.

luis1988

100% broker! A good broker can look through your history and determine who is likely to lend, rather than wasting time and adding searches to your files.

Also, you can find a good broker that won't charge, many make their fees from the lender

ACG

Defaults, pay day loans and a Debt Management Plan. I am not so sure I would be looking at HSBCs rates as a guidance for cost.

It is definitely one for a broker and a good experienced one in adverse to give you any real chance of high street rates. I would say worse case scenario will be rates of around 6%, although you could probably get it down below 5% with a 15% deposit.

mildredalien

ACG wrote: »

Defaults, pay day loans and a Debt Management Plan. I am not so sure I would be looking at HSBCs rates as a guidance for cost.

It is definitely one for a broker and a good experienced one in adverse to give you any real chance of high street rates. I would say worse case scenario will be rates of around 6%, although you could probably get it down below 5% with a 15% deposit.

That's disappointing to hear, we've both worked hard to clear up our records over the past 4-5 years and have had no new negatives within that time. Obviously this is all problems of our own doing, I was hoping that lenders would place more weight on the last few years! In fact nothing showing on my credit record for open or closed accounts in the past 6 years is adverse (any missed payments and the one default were prior to 2010 so don't show any more).

I'm not 100% sure about my husbands however so there may be more problems there. I know he has a lot more accounts closed/settled so we'll have to check the dates - obviously one default wasn't settled until last year so that will show up.

Oh well hopefully a broker will help us out, it'd take us another year to save another 5% for our deposit. Any tips on finding which brokers are experienced in adverse credit issues?

ACG

There could well be a chance of you getting this through at high street rates then. But at 90% LTV with the mixture, I would not be basing my calculations on a lender who offers the best rates in order to get the "best" customers. By best I mean the least risky.

The 5-6% is a worse case scenario.

Lenders do regard the more recent years more importanlty but they can see 6 years so it will have some weighting. HSBC have very good rates and tend to cherry pick who they want.

As I said, I think if you speak to a broker you can work from there and see what is achievable. Without seeing your reports HSBC could well be an option, I would just not bank on it at this stage.

mildredalien

That makes sense, while I've been a good customer for HSBC for many years we are more risky on paper than anyone with a squeaky clean record. We'll see what the broker has to say next week, thank you for the advice!