help, mortgage stress, not sure whats best.....

alr82

Ive never posted before so be gentle.....
its a bit long winded.....


my husband and I have had our mortgage with Coventry for 10 years, we had it back in the day where they were literally throwing 100% mortgages at you and it was one of the MOREgage products where we had a 95% mortgage and 5% personal loan for the deposit.
anyway, long story short about 6 years ago we got into a bit of a financial mess, everything got out of hand and we ended up with defaults galore.
we have since paid them all and they have all fallen off our credit files apart from one....the Coventry loan is due to drop of mid july this year, it defaulted for 9700 back in july 2010 and we have been making shortfall payments since and the balance is now 6500 but this hasn't been updated on credit agencies as Coventry said as its defaulted they don't have to update until satisfied. they have assured me this is not a DMP but is just shortfall payments and obv we have to settle amount but they are aware we will be selling up soon and will take the balance from our equity then.
anyway, we need to move house,.....desperately, we have a 2 bed house, 3 kids and my hubby and myself have been sleeping in the conservatory for 18months, we have held off as long as poss to clear up credit and wait for all defaults to leave in july.


I have spoken to Coventry and asked if we can offer a partial and final settlement on the amount outstanding to try and shift it before selling up but they wont accept anything less than the full amount as they have checked the z index, or something, and know that we will have enough to settle amount and provide a deposit on the sale of our home, which we will.


my concern is we will have to declare this debt when we apply for a mortgage as it will show up on bank statements that we are making payments to Coventry monthly even though debt will no longer appear on any of our credit reports. we are happy that on the sale of our house we will clear the debt with the equity leaving us enough for a 15% deposit on our next home.
my problem is as this will have to be declared will it impact on us getting a mortgage, even though it will be fully cleared on sale of our home? im thinking they will know at one point we had a default for a large amount and even though over 6years ago and not on credit files, and even though will be settled at sale of house, will still come back to bite us on the bum?!


I was thinking our other alternative would be sell our home, pay off debt and then rent and then re apply for a mortgage after that as then debt wont appear on credit files, wont be outstanding and no one will have to know about it. but that means stress of 2 house moves on us and the kids, trying to find a decent let, and worry over impact of change of address on our credit report! im so stressed about what to do!


btw.....when we go for a mortgage either way it will be through a broker.....ive read enough on here to know that!!

HappyMJ

Yes you have to declare anything outstanding at the time of your mortgage application whether or not the debt is being reported to a credit reference agency.

alr82

thanks for your reply,
im aware that it will have to be declared, what im wondering is as it wont show up as a defaulted account on credit reports and as the full balance will be paid on sale of our house (ie, not taking it forward once we buy next house) will it still impact our mortgage chances?

amnblog

alr82 wrote: »

btw.....when we go for a mortgage either way it will be through a broker.....ive read enough on here to know that!!

You have answered your own question.


Do not stress yourself further but inviting uninformed responses on here from people who do not understand your full situation.


Consult a broker.


If your mortgage payments (rather than the MORE loan payments) have been made in full and on time, things are actually probably very manageable.

Thrugelmir

alr82 wrote: »

I have spoken to Coventry and asked if we can offer a full and final settlement on the amount outstanding to try and shift it before selling up but they wont accept anything less than the full amount as they have checked the z index, or something, and know that we will have enough to settle amount and provide a deposit on the sale of our home, which we will.

Why should a lender give you a free lunch so to speak? If you can afford to move along with meeting mortgage repayments. Then you should be channelling your energies into repaying the debt. The concern for any potential lender is that you don't appear to have taken being in arrears seriously. Ok you defaulted but that was 6 years ago. Long enough to bring your house back in order.

alr82

as i said in my original post, I do not want a 'free lunch' we have been paying back the debt and intend to fully settle at the sale of our house,of course we would have settled it by now had we been able to.....we don't want anything for free!
my question was nothing to do with getting out of paying for anything, and we have managed to pay back everything we owe, in full, and in order to do so have been sleeping on a conservatory floor for 18 months.
the fact of the matter is we can stall no longer and need to sell....we intend to repay our only left outstanding debt IN FULL when we do so.....you seemed to have missed my question entirely.

Debtslayer

A good mortgage broker will answer any questions you have.
I would think that a lender may make it a condition of mortgage that the debt is repaid, but you're going to be doing that anyway so shouldn't be a problem
Good luck with your future purchase

Thrugelmir

alr82 wrote: »

.you seemed to have missed my question entirely.

Not in the slightest.

we can offer a full and final settlement on the amount outstanding

This tells a lender more about you and your attitude to money than you may realise.

These observations are not personal opinions either.

alr82

It was meant to say partial settlement.
Well it tells me that although we have been paying off what we can afford every single month for the past 6 years, we cant afford to settle the full balance till we sell our house, but were willing to pay off what we can now as a settlement if they would accept, which they didnt, which is fine. We will pay in full.