Mortgage application and credit file

AlabamaW

Hello MSE’ers, I’m about to apply for a mortgage unexpectedly. (We were planning on buying next year but our dream property has come up). Because of the quick turn around we haven’t prepared by checking our credit files or not applying for credit/staying out of overdraft etc. It also means we’re going for a 95% mortgage as we only have enough saved so far for 5% deposit and the stamp duty. I know 95% mortgages will be stricter criteria so I’ve today checked our credit files and bank statements. They look ok. We have no late or missed payments, a reasonable amount of credit card debt (8k for him 10k for me - both using around 35% of available credit). However DH has until this month constantly been in his authorised overdraft. (He doesnt need to be, he has savings, he’s just bad with money). In the last three months we have opened a new joint bank account in Jan with NatWest, had 1 application for a loan (didn’t take it but was to see if we could put credit cards on it) plus I got a new O2 contract. This seems to have plummeted my actual credit score. I know credit scores mean nothing but this is all on my file which the lender will be looking at. How will this be seen by the lenders given our good payment history? I also have good history with Nationwide as my previous mortgage was with them. (we’re going for Nationwide mortgage). We’re now living like monks but I’m wondering whether we should try and delay applying for the mortgage by a month just so we have another month clear of all this bad stuff. Anyone know about how the lenders will see these things?

Thanks

AlabamaW

I should add we pass the affordability. It’s the credit check that worries me.

LRmortgage

As long as you pass the affordability calculator with the debts included and your credit file is clean then you shouldn’t run into too many issues.

AlabamaW

Hi, by clean do you mean no missed or late payments? We have that. How about 2 brand new open accounts suddenly appearing?

ACG

Assuming you pass affordability and credit checks you should be fine, nobody here can really say whether or not you will pass the credit check based on limited information but there are lenders who will be better for this type of application and lenders who will put you through the mill a little with more questions than necessary.

Nationwide will look at your overdraft balances a little more than some lenders - that does not mean they will decline you, but if you are not using a broker, I would just run the case through with someone there to make sure it will be ok and you are putting in the right figures on the calculators.

PauloF1

A family member recently had exactly the same scenario when they moved house. Running his own business, he'd had some cash flow issues and because of it had some fairly recent missed payments. Affordability wasn't an issue, but the payment history was for some lenders.

Having just remortgaged myself, the affordability element is a key part, if the lender thinks your newly opened accounts are credit accounts and the monthly repayments increase your outgoings, it will hurt affordability. If they don't impact on affordability they should not be much of an issue.

As ACG says, it's hard to know from the info you've supplied about the credit check side. The credit report isn't really what the lender uses, they all have their own specific questions/checks and underwriting process. There is a lot of misinformation on what elements of credit score are important and what lenders take what info into account.

Do you mean you have missed payments in your post? As that is what stopped my relative with high street banks, he'd missed it for credit checked payments (mortgage, car and phone) and ended up going with a bad credit mortgage broker to get the best deal. They have pretty comprehensive information on their site, including for checking your credit history/report: https://www.simplyadverse.co.uk/understanding-your-credit-report