AIP declined

Hammath

Hi folks,


Have been going through an attempt at applying for a mortgage and as above my AIP was declined. This was done through a broker and due to my poor credit I sort of expected this outcome. However, apart from wait for a few months I haven't really had a solution, so wanted another opinion to see if another broker may well be worth pursuing.


Brief outline:


Me.
£24k annual salary £6k annual bonus (paid monthly)
£1000 owing on 2 small CC's
£6000 outstanding car finance

6 defaulted accounts from 2013/14. All settled in full this year (on brokers advice) All but 1 will drop off credit report by January 2019 and the last one is June 2019.


Wife.
£12k salary
£2500 owed over 2 shop accounts (very + next)
£1000 on CC


10% deposit


My credit report makes for poor reading historically, due to me not managing my finances over a period 5 years ago, however I have settled all these accounts.


Wife has no missed payments etc.


Was told that verbally Accord had agreed to look at us for a decision pending their own credit scoring however they have declined today and the broker has advised waiting a few months and not applying for any other credit, lower balances of credit cards etc and keep the bank account looking nice and tidy.


Reasonable advice or seek advice elsewhere? If I have to wait for the settled defaults to drop off and apply again at the beginning of 2019 then so be it, at least I will have a timeframe for a re try.

mortgage1st

I had a very similar scenario to yourself. I have used a broker called CLS Money, they got me a Decision in Principle with Bluestone Mortgages and I've made my full application just over a week ago and I'm awaiting the decision to then progress to valuation which I hope all goes OK! There are definitely lenders out there who will consider you it just depends on what lenders your broker has access to approach.

The only difference that I have is no credit card or store card balances but I can't imagine that will make much of a difference as my partner who has a good credit score has got a credit card balance of about £2k and we still got our D.I.P.

I'd try and find another broker who is a specialist in former credit problems as they'll be more equipped to approach the right lenders.

middleclassbutpoor

I would wait for them to drop off your credit file and then get all 3 credit reports printed off and go back to a broker.

Hammath

I would be happy to approach another broker even just to satisfy myself that waiting is the only option, however, being based in Northern Ireland I am really struggling to find a broker who has experience in adverse credit and would not just reject us at the initial meeting, which is why I placed my faith in the broker we found who was very positive up until rejection.

middleclassbutpoor

so if you wait and all your defaults fall off in January - won't your credit file look a lot better and then you access better rates. Seems a lot of hassle and potentially you paying higher rates just because of 6 months?

sal_III

You seem to have a sizeable debt and looking for 90% LTV, your only chance is for high rate mortgage. This might put you in a trap of never being able to escape the high rate by going to a "high street" lender.

It might be better to clear some debt, before taking on even more debt. and look at more decent mortgage rates.

How much are you looking to borrow, how much rent are you paying now?

Thrugelmir

Hammath wrote: »

6 defaulted accounts from 2013/14. All settled in full this year (on brokers advice)

Should have cleared them sooner. Look at the matter from the lenders perspective. Profiling of applicants is an important part of the application process. With criteria tightening lenders appetite for risk diminishes.

Hammath

100% I should have cleared them sooner. Buried my head in the sand when I was younger and I won't deny that.

The only reason to try and progress sooner than when the defaults drop off I'd the house we have seen. I may well find a suitable house in 6 months time but not in this location at this money.

I'm looking to borrow 135k with 15k deposit and currently pay £550 a month rent.

Hammath

Also weather my defaults drop off in Jan and improve my credit rate and open me up to better rates with a high street lender is basically guess work.

SnuggleBuggles

I personally would use two thirds of your deposit money to totally clear your combined outstanding debt. I would then wait a year, until ALL your defaults drop off & then reapply for the mortgage. The money you would have used for debt repayments between now and then could instead be used to replenish your deposit / savings fund. That's what I would do.

sal_III

For your credit history and LTV expect rates in excess of 4%, even at that your monthly payment on (repayment) mortgage will be higher than your current rent.

I don't understand why people save for a deposit while paying interests on substantial debt at the same time, it's false economy.

Use your savings to clear out the debt and start saving again while waiting for the defaults to clear.

And most importantly - If you are planning to take on a mortgage debt of £120k instil some financial discipline and stop spending money that ain't yours on CCs and store cards.