Getting a mortgage with 2 year old default?

L11

Good Afternoon Guys, I have been lurking on this forum for a few weeks now and I've gained so much information so thank you! I've just got a question about me and my partner's first home purchase and a few past credit issues

We've put an offer in for a property for £155K and we have 5% deposit so looking for a 95% mortgage. My basic is £26K and I normally make around £5k bonus, my partner £18k and around £2K bonus. Combined income even without bonus is £44K so this is well within our "affordability".

The problem we may have is my partner's credit.. She has a default on her account from 13/05/2014, for £372. It was with Lowell portfolio and I think it was originally for a catalogue. Since then her credit has been fine, she has a credit card and 2 different phone contracts all paid on time.

My credit is pretty good, although looking through my file I've missed one payment over 3 years ago, but every other payment on 15+ (open and closed) accounts in the past 6 years has been fine.

My worry is whether we'll be able to obtain a mortgage with the relatively recent default on her file? Can anyone recommend a lender that is more likely to accept us? We applied for a decision in principle through Lloyds which I understand does a credit search, and this was accepted, so they seem to be a good shout. Their rates dont seem to be the best though, any other ideas?

The other small spanner in the works is that I have a job interview on Thursday. If successful the basic is £4K more and the project bonus 5K more (so 10K total bonus). It would be a great opportunity but would this be a no go if we want to apply for a mortgage? Obviously I'm applying with the payslips from my current job, but what if I change jobs 4-5 weeks down the line?

Sorry for the wall of text and thanks for any help anyone can provide!

MortgageMamma

Default - possibly - is it satisfied?


Are you using the government help to buy or equity loan scheme/


Changing jobs, not such a good idea if you want to buy now. You'd have to evidence your bonus in payment if its annual for it to be included, especially if its a non guaranteed completion of project bonus (performance related).


In short you shouldn't change jobs mid house purchase, before completion certainly as it will really !!!!!! things up.

amnblog

Your deposit is slim for this scenario.

Did you not investigate your mortgage options before you put your offer in?

L11

Yes, the default is satisfied. We will potentially be using the help to buy mortgage guarantee scheme as its an older property, but if we could get a true 95% mortgage elsewhere then this would be fine.

You asked if we investigated mortgage options prior to the offer, but would this not be obtaining a decision in principle, or have I missed something? I thought the whole idea of it doing a "soft search" was to highlight any credit issues?

amnblog

I missed that you already had a decision in principle 'yes'.


If that is the case stop worrying about the rate, you are very lucky to have a pass given the circumstances.


Don't spend anything on the legal process until the full application is in and at formal offer.

L11

Thanks for the advice!

MortgageMamma

I agree with AMNblog I always advise my clients to hang fire paying for the legals until the offer is in place, it does add a few weeks to the process usually so make sure you are organised and have all the documents you need to give to the broker/bank/lender at application stage. It speeds things up significantly. If you adopt this strategy its also a good idea to establish turnaround times with the lender (i.e. how long each stage of the processing is going to take), as some lenders are much faster than others. Also to get an idea from the vendors of when they would wish to complete the sale.

L11

Thanks again. Unfortunately after an appointment and going into a bit more detail, Lloyds have told us that they cannot lend to us with a 5% deposit. 10% is absolutely fine so its a matter of either waiting (and obviously losing this property), finding a gift from a relative, or discussing with a broker whether there are any alternatives.