95% Mortgage with a Default - Advice Needed!

natalie89

Hi,

My partner, Chris and I are trying to buy a house in Bristol. We've used 3 different mortgage brokers so far, but now it seems they have all realised his bad credit is more serious than previously thought.

We have only 5% deposit, and Chris has a default on his credit file, for less than £1000 credit card debt, over 2 years ago which was settled in full.

We've been advised that even if we can get accepted for a mortgage, we may be paying 6% interest!

I wanted to know if anyone else is/has been in this situation and can offer any advice?

If there was a good mortgage broker who specialises in these types of mortgages, and doesn't charge a huge fee?

Would it make a difference if we go for a house that's alot cheaper?

Would it make a difference if we try to scrape together 10% deposit?

Our only options I can see are to wait and save up more deposit (although this might not make any difference), wait for the default to expire (another 4 years or so ) or hope and pray that someone, somewhere will lend to us!

If anyone can think of a better option please reply.

Another thing limiting us, is that we have a dog so we need to buy somewhere with a garden, ruling out a lot of the cheaper flats.

Zeebs90

Hi

We had a similar situation about 6 months ago with my partners credit history and the only option for us was a 6% mortgage which was completely unaffordable. Despite us itching to get a property, we took the advice of our broker and waited six months to save some more money (and push us into the next LTV bracket meaning we have just got a rate of 1.94% with Halifax and monthly payment half of what we were looking at 6 months ago!) and the extra time made his credit issues that little bit further away to prospective lenders.

We have just passed the credit check (hopefully they don't change their mind!) with Halifax and we are waiting for a valuation. So I would suggest holding tight even for just 6 months to get yourself in a slightly better position. I'm so glad we did!

natalie89

Thanks Zeebs90.

Please can I ask what your LTV was 6 months prior, and currently?

We are also being advised the interest would be 6% at the moment with a 5% deposit.

I would be able to wait 6 months but I don't think the default will look any better then! But at least we would have possibly got the 10% deposit, so who knows.

House prices in Bristol are going crazy at the moment, I can only see them being higher in 6 months.

Good luck with the rest of your purchase!

Zeebs90

We were quite fortunate as my Dad is helping us with the deposit so we were 80 LTV before and now it is 75.

David_White

Are you wanting to purchase a new build or an older property?

A mortgage with just a 5% deposit may or may not be possible with a default in the last 3 years depending on the answer to that question.

Unfortunately you'll find most brokers dealing with cases of this nature will charge more as arguably a situation like this requires more work and knowledge than one with a perfect credit profile and big deposit.

ACG

Your options are pretty much limited to one as far as I am aware of which I think is probably the same as Dave White is thinking.

With a 10% deposit there lenders under 6% one of which has no arrangement fees and a free valuation.

natalie89

We are open to new-builds as well, but we have just been focusing on houses that have gardens - which hasn't really been an option with new-build properties we can afford, as they tend to be flats.

Are you saying we may be better off saving to get the 10% deposit, than trying to get a 95% mortgage right now.

I've been recommended Aldermore Bank, but not sure how much their broker fees are. Is this the lender you were talking about too?

David_White

Aldermore charge a fee and the broker handling your case would more than likely also charge a fee.

That said, Aldermore don't allow any defaults in the last 3 years.

ACG

It was not Aldermore I was thinking of as Dave says, you do not fit criteria.