Llyods Lend A Hand Mortgage

DisneyDad_2

Hello

I've got an appointment at my local branch tomorrow for their Lend A Hand Mortgage. My parents have kindly offered to put £15,000 in to the savings account so that I can apply. The only thing is I'm absolutely terrified! I had credit issues in the past, and entered a DMP. All that is now paid off and there is no adverse credit showing on my Experian credit report.

However, I do have credit card debt of £11,500 of £14,000 available credit. This will be £8,000 at the time of the mortgage starting. My income is £28,500, a bonus of £2,600, Child Tax Credits of £3,939 and Child Benefit of £1,788. These are all paid in to my account. My wife is a carer for our son and receives.Carers allowance and is the recipient of our son's DLA of £5,720. She has a loan in her name with £10,000 o/s to clear overdraft credit card debt in a more efficient manner. She pays £208 a month towards that and it has 3 years left to run. Currently, the mortgage will only be in my name, as we can't seem to find a lender that will accept our son's DLA as income, so my wife basically just brings debt to the application.

I spoke to a broker regarding a 95% LTV mortgage and she was confident that it was achievable. However, whenever I've done any soft-check DIPs (Halifax, Clydesdale Bank and Accord) I get a rejection. I can only assume this is due to the credit card debt, as there is no adverse credit. My worry is that I was just being led on in the hope that she could get me through a DIP, I'd pay the £999 once we were placed with a lender and a full application would never be successful and I'd face a fight to get the fee back (the fee is refundable if we can't get a mortgage).

Sorry for the long story, but in short, has anyone else been through this application with Lloyds and had any success?

Thanks

[Deleted User]

DisneyDad wrote: »

Sorry for the long story, but in short, has anyone else been through this application with Lloyds and had any success?

Yes, they have, but that's not relevant to your application.

Have you checked all three of your credit files for any adverse data?

If the fee is refundable if you don't get a mortgage, there would be no fight to get it refunded if you don't get a mortgage.

DisneyDad_2

Hi

Yes, I checked all 3 credit reference agencies. The only discrepancy was BarclayCard lodging AP markers for years whilst I was on the DMP. The last of which is 3 years old. I've gone to the Ombudsman about this and their official decision is that the markers should be removed and the debt defaulted to Sep-2012 when the DMP began. So it won't appear in my Equifax or Call Credit reports at all (it was never reported to Experian). I don't expect BarclayCard will appeal, based on similar cases, but it will be a couple of months before that gets addressed, I expect.

Regards to the fee to the broker. I'm just very wary of handing over money on a promise of it being returned later (ironic, given my past life as a rubbish borrower). This is my first experience of this, and I suppose I'm a bit paranoid.

kingstreet

If you've been declined by Halifax I would suspect the same result with Lloyds.

Brock_and_Roll

The OP has previously been in a DMP yet has current unsecured debt equivalent to 51% of total income.

The root cause of the overspending needs to be examined. Will there be a significant reduction inc costs by buying as opposed to renting (after the additional costs of home ownership are factored in)?

DisneyDad_2

£11,500 debts are interest free credit cards and do none begin to accrue interest until late 2020, so £5,000 of the debt would have been covered by bonuses. The remaining £6,000 was more than covered by various benefit payments over the next 18 months. We took the kids to Florida and replaced our 12 year old car that was beginning to cost a lot to repair with a 5 year old Vauxhall Insignia. There's no consistent overspending on a month-to-month basis. Theses were once-every-5-year items that we could am-mortise the cost of cheaply over time.

The cards are 33% of total income, not 51%. The potential of home ownership was 2-3 years off 3 months ago, the availability of a gifted deposit was a complete surprise, hence the lack of urgency in reducing these balances previously.

Mortgage would be £160 per month less than current rent.

Exodi

If you're worried about the fee being returned, apply through a free broker (albeit the circumstances described makes me dubious you'd be able to get a mortgage).

DisneyDad wrote: »

we can't seem to find a lender that will accept our son's DLA as income

With all due respect, DLA is meant to help with the extra costs that may be incurred due to disability NOT to subsidise an investment. I won't dwell on this point.

DisneyDad wrote: »

£11,500 debts are interest free credit cards and do none begin to accrue interest until late 2020, so £5,000 of the debt would have been covered by bonuses. The remaining £6,000 was more than covered by various benefit payments over the next 18 months. We took the kids to Florida and replaced our 12 year old car that was beginning to cost a lot to repair with a 5 year old Vauxhall Insignia. There's no consistent overspending on a month-to-month basis. Theses were once-every-5-year items that we could am-mortise the cost of cheaply over time.

The cards are 33% of total income, not 51%. The potential of home ownership was 2-3 years off 3 months ago, the availability of a gifted deposit was a complete surprise, hence the lack of urgency in reducing these balances previously.

Personally I think you have your head in the clouds. Just because the debt is on interest free cards does not mean it's not debt. You seem to be reliant on 'bonuses' (presumably employer bonuses), a quick flick through MSE will show relying on employer-discretionary bonuses to be risky. You also seem to be making the classic problem of spending 'tomorrows money' today by committing the next 18 months of benefit repayments. You're in a fair amount of debt and, yeah, call me stupid for not buying into the sales mantra of 'live for today!' but I think the trip to Florida and buying a 5 year old car was completely foolish.

Good luck with your potential home purchase but I think this just screams 'repossession' should you get a mortgage if your mentality doesn't change.

DisneyDad wrote: »

Mortgage would be £160 per month less than current rent.

+ consideration for being solely responsible for maintenance. I'd imagine it will be about the same if the house is older.

Perksy5

It doesn't matter if your debt is 0%, a mortgage advisor will stress test all of your debt repayments. So as a previous poster stated, your 31% of income all in debt for the application will be much higher. Adding on the mortgage payment in addition to the stressed repayments, in my opinion, having seen several DIPs and mortgage applications, will push you beyond the affordability threshold and you may be declined to ensure lender is acting as a responsible lender. You'll need to knock a chunk out of those credit cards to stand a good chance of a strong application.

DisneyDad_2

Exodi wrote: »

With all due respect, DLA is meant to help with the extra costs that may be incurred due to disability NOT to subsidise an investment. I won't dwell on this point.

It is not subsidising an investment, but when I say I'm spending more on petrol than an average person due to hospital visits and commuting to support groups, taking him out to places, and paying for therapies and respite with cash, that all counts in living expenses and has to be explained in bank statements, but the funding source that covers this can't be included in the affordability calculations. I'm not saying it should or shouldn't, it's just something that I have to factor in.

Exodi wrote: »

Personally I think you have your head in the clouds. Just because the debt is on interest free cards does not mean it's not debt. You seem to be reliant on 'bonuses' (presumably employer bonuses), a quick flick through MSE will show relying on employer-discretionary bonuses to be risky. You also seem to be making the classic problem of spending 'tomorrows money' today by committing the next 18 months of benefit repayments. You're in a fair amount of debt and, yeah, call me stupid for not buying into the sales mantra of 'live for today!' but I think the trip to Florida and buying a 5 year old car was completely foolish.

I'm unsure what is foolish about spending a very modest amount on a car at 0% interest that is necessary for both commuting to work and attending hospital appointments for our son. My bonuses from work are contractual for the first 7.5%, not discretionary and the amount of the first one has already been confirmed in writing. I'll accept that the holiday wasn't the best idea in hindsight, but circumstances in life make you make emotional decisions so we opted to go last year, rather than defer it for a couple of years, and as I've said, home-ownership wasn't even a consideration at the time so carrying the debt wasn't such an issue, and it's on course to be repaid well within the interest-free period of that card.

If the option of home-ownership had come up this time next year, the debts would be largely clear, if not completely gone. It's just that the situation has presented itself much earlier than anticipated. If I can't get a mortgage right now, I'm not bothered. I like our house and the area, we have a good lifestyle, and in 12 months I'd be in a stronger position.

Sorry if that's spoilt it for the minority that read these forums to feel better by judging how others spend money, but I've had debt I couldn't manage and it is a very different feeling to where I am today with debt that I'm comfortable servicing.

DisneyDad_2

Perksy5 wrote: »

It doesn't matter if your debt is 0%, a mortgage advisor will stress test all of your debt repayments. So as a previous poster stated, your 31% of income all in debt for the application will be much higher. Adding on the mortgage payment in addition to the stressed repayments, in my opinion, having seen several DIPs and mortgage applications, will push you beyond the affordability threshold and you may be declined to ensure lender is acting as a responsible lender. You'll need to knock a chunk out of those credit cards to stand a good chance of a strong application.

Thank you. If that's the case, then fine. Over the next 6 month's I'm in a position to do that. Previously, I was just spreading the total expenditure across the interest-free period in equal amounts, living comfortably still and saving a bit. I can definitely reign in our lifestyle for 6 months and put the savings so far towards reducing the debts.