Mortgage Refusal

CraigS1969

Hi all

First time poster, so please be gentle!

We're currently in the process of applying for a new mortgage and have cut it down to three lenders - Coventry, Barclays, HSBC, with TSB (our current lender) as a back up. We were initially turned down by TSB, but this was due (at least in part) to the fact that there were numerous errors on our credit score, which we have since had rectified.

We're looking to borrow £182,000 (£26,000 for debt consolidation) and our house is worth around £282,000, making a 65% LTV.

So our first choice, Coventry, were the first to go through the process with us. Our affordability was fine, but when they did the credit check (with Equifax) we were turned down. Our next two, I believe, check withy Experian.

I'm aware from reading various posts that the actual credit scores aren't that important, but as a guide I have a top score at Experian and an excellent score at Equifax. My wife is just 7 points away from an excellent score on Experian and Poor on Equifax (go figure!).

Now, we do have some missed payments over the past 6 years. Our most recent ones are on a credit card - 6 and 8 months, but all the others are over between 1 and 2 years (5 misses) and between 2 and 6 years (4 misses). Not great, but we've sorted things out recently and most of the misses are older. I question those over one year old, and I may organise bank statements going back six years in order to check. I believe these are marked 1, 2, 3, 4 etc - ours are all 1s which is pretty good.

But my question is - will this have a negative impact on our applications. Will Barclays, HSBC and TSB all go down the route of Coventry, or is Coventry known for being particularly tough?

Thanks
Craig

Thrugelmir

CraigS1969 wrote: »

I'm aware from reading various posts that the actual credit scores aren't that important, but as a guide I have a top score at Experian and an excellent score at Equifax. My wife is just 7 points away from an excellent score on Experian and Poor on Equifax (go figure!).

Nothing to figure. As lenders will score you themselves against their own internal criteria.

The £26k of existing debt is an obvious issue in the broadest sense. Lenders will have an much greater insight to this than you may realise.

Recent missed payments are an an obvious red flag. No excuse not to pay at least the minimum every month with a direct debt set up. A longstanding history suggests that you don't manage your finances very well.

Not a question of being tough. Lenders simply look for the better risks. I.E. people that will repay their mortgages over 300 months without any requirement to be micro managed. Lenders have no need to chase business.

CraigS1969

I should have said - no missed mortgage payments, ever.

downhillfast

With so many missed payment on file and the fact that you currently have debt (that you intend to pay off) I'd say instead of risking another credit search that could result in a refusal it might be worth using a mortgage broker to match you to a lender that is more likely to accept you. It's all very well picking your own lenders based on the offers they have but if they are going to turn you down flat then it's a waste of time.

csgohan4

CraigS1969 wrote: »

I should have said - no missed mortgage payments, ever.

Your expected not to miss mortgage payments, You do not get rewards in life for things your supposed to do, like paying your bills. Although the penalty for not doing so is far greater

Thrugelmir

CraigS1969 wrote: »

I should have said - no missed mortgage payments, ever.

Making payments on time to the agreed contractual schedule is the most basic requirement of building a good credit history. Whether it's the mortgage, credit card or utility bill. That's why CRA's collate data from different sources. It builds up a complete picture of you as a potential customer. There's no hiding.

CraigS1969

csgohan4 wrote: »

Your expected not to miss mortgage payments, You do not get rewards I life for things your supposed to do, like paying your bills. Although the penalty for not doing so is far greater

Not looking for a reward. I believe it's relevant that my missed payments were on smaller items such as credit cards at £40 per month, as opposed to an £1,800 mortgage payment.

CraigS1969

downhillfast wrote: »

With so many missed payment on file and the fact that you currently have debt (that you intend to pay off) I'd say instead of risking another credit search that could result in a refusal it might be worth using a mortgage broker to match you to a lender that is more likely to accept you. It's all very well picking your own lenders based on the offers they have but if they are going to turn you down flat then it's a waste of time.

Will definitely do that, although I'll let the other two run as they're both soft searches. Cheers.

ACG

You appear to be thinking these late payments are less important than they are and at the same time wanting the best deals. The best deals are usually reserved for those with the best payment history - they come hand in hand.

I can not comment on hsbc/first direct as they do not really deal with brokers in the main but they are known for being quite strict.

My personal suggestion would be to get all 3 reports infront of an experienced broker. There is no reason why you can not get normal rates but as you have seen, despite the equity it is not for every lender.

glosoli

Debt consolidation can be a regulatory nightmare for the advisor/lender. It is perceived as particularly high risk in your own case because of the late payments. Goes without saying obviously but missing credit card payments is one thing but if you begin missing mortgage payments then the house could be repossessed.

ferry

Is it safe to assume that there is very little success in the mortgage market these days .Surely only the squeaky clean benefit?
Mortgage providers turn a blind eye to fact most people are thrown a curve ball at some point during a 25 year commitment. Many will back on their feet after a year or so but will have to wait at least 6 for the market to open up for them to any extent.
Come to think of it credit card providers are no different.
It will cost you more to survive if you have an unfortunate episode in your life,often beyond your control,as you will be subject to rates that are likely to mean you will be punished for a very long time...