HTB equity loan, FTB & some adverse

BigTaff

Hello,

My wife and I are considering buying our first home this year. We are going to use the HTB equity loan scheme as there several large nearby developments. I have completed and received several "applications in principle" (soft searches only) with Halifax, Lloyd's, HSBC and COOP. I realise a manual application is needed for HTB and HSBC and coop don't do HTB but wanted to get an idea of how likely we are to get a mortgage. This is because there is adverse credit between us. There are 4 defaults which are a little over 5 years old and 2 late payments on a mobile phone in 2013 (switched current account and something went wrong with the direct debit, we had to re-establish it twice). To make matters worse, the Mrs only decided she wanted to buy a house after we had re-financed existing credit so in the last 2 months there searches and new accounts (all showing on credit files when AIP's done). Do you think this will affect our ability to get a competitive mortgage? We earn £66,000 between us and have debt outgoings of £824 per month (yes, I know that's a lot. Please don't judge as you don't know the circumstances and it's not something I would want to share). We are thinking of a maximum purchase price of £260,000 so on HTB maximum loan of £195,000. We seem to pass on affordability but I'm very, very nervous about the delay when buying new between exchange and completion. We are currently saving between £1000 - £1500 per month for the deposit. All other accounts are green and the defaults are only showing on Equifax (the 2 in my wife's name are at our previous address, they are all old catalogue accounts - 2 unsatisfied and 2 showing as "settled" (not satisfied which I found strange)

Another question - with regards on HTB equity loan, would there be a minimum amount we would be expected to borrow to qualify? Could they say we don't require assistance if we bought a much cheaper property say £170,000?

Thanks for your time

madders1990

I would personally suggest going through a broker given the adverse credit notes etc, the broker can explain the reasons behind this to the lender, they will also know which lenders will accept who in what circumstance etc.
Also you don't have to pay for a broker these days, some just work for the banks commission!
hope that helps

amnblog

1. Adverse credit severely limits your options with H2B
2. Extensive existing credit can scupper affordability on H2B

Actions

1. Stop running decisions with Lenders for no sensible reason
2. Get some proper advice from an experienced broker

To get a result here, you need to put the situation in the hands of someone who knows what they are doing. Your current route will lead to disappointment.

BigTaff

Oh ok, thank you for the reply. Perhaps you could point me to the affordability calculator you use? The ones I've found so far from the help to buy websites and banking websites were suggesting that my figures are easily affordable. The independent broker I spoke to said we "fly" through affordability. I'm glad you've put me straight there, appreciated. Also appreciate your advise not to approach banks who use soft searches to guage likelihood of acceptance. I'm clearly doing unseen and untold damage.

I think I'll be ok from here. I'll go through my bank (Halifax) who have given us a decision in principle for £237,000 with all outgoing declared and report back when they decline me.

I'm sorry if I come across a little sarcastic there but your reply has no basis in fact, unless you are able to provide a factual and logical response I'd rather you didn't respond at all and just let the thread die off.

BigTaff

Oh I just realised your a broker. Wow.

amnblog

Although you seem to have it all in hand, you might benefit from looking at this.

https://www.gov.uk/government/publications/help-to-buy-equity-loan-calculator-and-guidance

BigTaff

Thank you. Yes, I'd seen that. All good up to 300k max purchase price here in Wales we wouldn't be going anywhere near that.

I appreciate your time (sincerely)

I guess we just have to give it a punt via a broker

BigTaff

Just a quick update for anyone reading through this post. We had no issues with going through the Halifax, application to offer was just over a week. We are due to complete on our new build within the next few weeks. Of course nothing is ever certain until the keys are in your hand but we are in about as good a place as possible.

Noobie2011

BigTaff wrote: »

Just a quick update for anyone reading through this post. We had no issues with going through the Halifax, application to offer was just over a week. We are due to complete on our new build within the next few weeks. Of course nothing is ever certain until the keys are in your hand but we are in about as good a place as possible.

Just interested in reading your story as you were almost in the same place we are.

Me and my partner are going down the HTB and Adverse Credit route although our adverse credit is only a few missed payments nearly a year old and none more than 1 in a row. It seems the thing affecting us is the high utilisation on our debt as we only pay the minimum but in terms of affordability we flew by as we are looking at borrowing the same as you and have combined income of nearly 79k.

Our broker has said the likes of Kensington is our only option and said we are not meeting Halifax's criteria.

Do you mind me asking what was your credit history like in the last 12 months in terms of missed payments etc as I would have thought we would have been similar to your situation and be fine.

BigTaff

We had no adverse in the last 4 years. I would suggest doing an application in principle with Halifax as it seems to be very reliable and as it's a soft search it won't hurt your credit file. Our Halifax broker said they now use a live system and its very rare to be declined at full application if you pass the application in principle if your completely honest and declare everything. Our debts are significant but we went for a modest property and didn't come anywhere near pushing affordability. We showed how easily we could afford the mortgage by saving between £1000 - £1500 a month toward our deposit while maintaining all of our other payments including £600 pm rent (mortgage will be £540 pm). We told the Halifax advisor all of this and our plans and he had a chat with the underwriters, he said they signed off the case straight away and the system auto-offered as soon as the valuation was done. They asked for 3 months pay slips to confirm on call and shift allowances and a months bank statement to prove child benefit - I think it may have been a random audit to verify stated income. Best of luck, come back and say how you get on

BigTaff

Sorry, just to add - I would be wary of your broker saying you don't meet Halifax criteria as they don't have specific published criteria, you either meet their internal scoring and pass or you don't. The broker may have a good idea based on experience but I doubt very much he is privy to their scoring algorithm. It seemed to me that they were much more interested in if you could afford the mortgage and would you consider it your number 1 priority to pay each month if things got tight. They asked us would we be willing to give up lifestyle items to pay the mortgage - well, that's a no brainer really