Mortgage application queries

Stigy

Hi all,

It's not something that we're looking at in the immediate future, but within the next year or two my wife and I will be looking at applying for a mortgage. Now previously it was never a sensible option as I had debt that although was being paid, was affecting my credit-worthiness due to defaults and a couple of CCJs. I'm chuffed that now I'm debt free and once again credit worthy (this includes only one search of my credit history in the last 6-months, also). However, I appreciate this doesn't necessarily mean I'll be able to get a Mortgage. The only two negative aspects of my credit file are the two CCJs that are listed, although long since satisfied. For the benefit of a mortgage though, I'm not bothered by these as the entries were made in Feb 2011 for one and April 2011 for the other, meaning they'll gone by April next year or there about.

As I mentioned earlier, I believe myself once again to be credit worthy once again, or verging on it at least (of course two CCJs, satisfied or not, won't exactly be having a positive impact!), this as far as I'm concerned, is ever more obvious as last month I was accepted for a 'normal' credit card. By normal, I mean a card not designed for bad credit, with extortionate interest rates (I got accepted for a Capital One card with a rate of 6.7%, irrelevant as I intend to pay in full each month). I have another card, which is....abnormal I guess? It's Vanquis and intended for improving credit ratings (can't criticise this card, as without them I doubt I'd have been accepted for the latest card!).

So in the next year or so, I am expecting my credit background to be very good. I will probably keep both credit cards and pay the balance each month, keeping each to within 100GBP (apologise for the lack of pound sign....it's the only key that's not working!). I've listed below the credit file as Experian has it listed as it stands;

Vanquis Bank - 1000GBP credit limit (had for 3-years, never had a missed/late payment)

Capital One - 2000GBP credit limit (only a month old at present)

o2 - zero balance as it's paid each month (phone contract)

02 - Closed account within terms of agreement

British Gas Trading - Closed account within terms of agreement

Nationwide - Current Account (always a zero balance as there's no overdraft facility anyway)

Below are other items I would assume are important for mortgage lenders;

Salary: 31,405PA (Plus 1,860PA London weighting, although I don't believe this is considered part of my salary for loans etc?)

Time in current employment: 10-years

I am on the electoral roll at my current address, where I reside with my wife, two young children and my wife's parents (hence being able to save at the moment!). I'm also 33-years of age.

Finally, my wife isn't in employment as she's a full time mum, so mine is the only income.

Can anybody advise as to whether there's anything else I can be doing to help myself, or what is likely to be looked at negatively by lenders for a mortgage? We're realistically looking at Help To Buy, as living in the South of the country, prices are extremely high and even on a relatively decent salary, I doubts Id be offered a mortgage for over 100k. Any advice would be welcomed and is appreciated!

Welshbigman

keep an eye on your credit using noddle its free. if you get child support some lenders will count that as income

Murray87

Hi There,

I'd say definitely speak to a broker, you may be very surprised at what may be available to you now. It's more about the age of the adverse and what's happened since.

We've just had an AIP through a broker with my CCJ which is 5 years and 9 months old, as well as (settled) defaults from 2011/2012.

We're using H2B, albeit with a 73% mortgage and 7% deposit. Hope that helps!

Stigy

Thanks for the help guys!

We'll probably stay where we are for the time being and save as much as possible (car will need replacing soon too). We figured the most we save now and get any big purchases out of the way, the better for the future. I was advised that the age of CCJs is key, too. I use Noddle, ClearView and Experian and am keeping a close eye on them all.

Thanks again!

Phil_H_MLIA(dip)_Cert_PFS

Your credit profile will not likely be the issue. A bigger (but not insurmountable) problem could be the (relatively) new affordability guidelines.
In the old days (ie 3+ years ago) a lender could basically take the £31k and multiply by 3x or even up to 4.9x subject to profile/Loan To Value etc.
The FCA under the Mortgage Market Review determined that this approach was not client-oriented enough and I have to confess that they very nearly go this right.
The new calculations would have to take into account that you have 2 small mouths to feed, and as such you would be able to borrow less than the next guy earning £31k but not be blessed with children.
Some (but not all) lenders will also class your wife as an "adult dependant" and that too can make a considerable difference.
The other aspect to affordability is one of age and maximum term. Previously 3x etc did not take term into account but under the new rules you are less likely to get that mortgage at 45 than you are at c. 35.
There are of course ways to use the calculations to your advantage if you know which lenders to talk to and how to formulate your application.
I think, but will check, that some lenders WILL take your London weighting into account - we are based in Worcestershire so it's not exactly a common question.

I trust that the inlaws are not going to be living with you?

Stigy

Phil_H_MLIA(dip)_Cert_PFS wrote: »

Your credit profile will not likely be the issue. A bigger (but not insurmountable) problem could be the (relatively) new affordability guidelines.
In the old days (ie 3+ years ago) a lender could basically take the £31k and multiply by 3x or even up to 4.9x subject to profile/Loan To Value etc.
The FCA under the Mortgage Market Review determined that this approach was not client-oriented enough and I have to confess that they very nearly go this right.
The new calculations would have to take into account that you have 2 small mouths to feed, and as such you would be able to borrow less than the next guy earning £31k but not be blessed with children.
Some (but not all) lenders will also class your wife as an "adult dependant" and that too can make a considerable difference.
The other aspect to affordability is one of age and maximum term. Previously 3x etc did not take term into account but under the new rules you are less likely to get that mortgage at 45 than you are at c. 35.
There are of course ways to use the calculations to your advantage if you know which lenders to talk to and how to formulate your application.
I think, but will check, that some lenders WILL take your London weighting into account - we are based in Worcestershire so it's not exactly a common question.

I trust that the inlaws are not going to be living with you?

Thanks for the reply....And God, no....they're most definitely NOT coming with us :beer:

This is a main reason why help to buy would be the only option to us I think. From research I carried out, even if I was offered a Mortgage it would only be for about 100k which would not even buy a 1 bed flat round here! (God knows how those on minimum wage would ever be considered, even under H2B). I know there's a lot more than just credit checking involved and hope in the next year or so we will have a sizeable deposit too, which will of course be a good thing.

The thing with the London allowance is that it's not shown on my wage slip where the salary is listed, so unless you manually add it together it doesn't look like it exists, if that makes sense? I assume it's because it's paid for differently, rather than directly from my company?