Have I got a chance of getting a mortgage?

XEO25

Hello

I’m looking for some advice on applying for a first time buyers mortgage via the Help to Buy scheme. I’m a single applicant, earning 40k per year, self employed (Ltd), with 2 years accounts.

The new build property cost is £200,000, and I have a 5% deposit.

I suspect my credit file will be the biggest issue, with 5 defaults between 13 and 18 months old, and another default 3 years old. I also have a late payment on 2 of my active accounts, 16 and 21 months ago. The reason for the defaults and missed payments was I was in my first trading year at the time and things were very tight.

Active accounts

Current account - good standing (£1,500 overdraft not being used)
Mobile phone - good standing
Mobile phone - late payment 21 months ago (no other late payments)
Mobile phone - late payment 16 months ago (another late payment 6 months prior)

Defaulted accounts

Credit card - default (£750) 13 months ago - fully settled 4 months ago
Credit card - default (£250) 14 months ago - fully settled 4 months ago
Credit card - default (£300) 14 months ago - fully settled 4 months ago
Credit card - default (£890) 18 months ago - fully settled 4 months ago
Credit card - default (£471) 3 years ago - fully settled 26 months ago
Catalogue - default (£3,150) 17 months ago - £3,150 owing, paying £115 p/month

Settled accounts

Car loan (£8,000) - good standing - fully settled (12 months ago) - no missed payments.
About 8 payday loans, all from over 5 years ago, all settled in full, no missed payments.

Based on the above information, is anyone able to advise on how likely they think I am to get accepted by a lender? I appreciate high street lenders may be off the table and that I may have to pay a little more initially.

Also, is my credit good enough to pass the Help to Buy scheme checks? This is my primary concern.

Finally, should I pay off the £3,150 defaulted account in full (if possible) before I apply for the mortgage? Would this be a big help or not?

Thanks in advance to anyone who can help. I’m seeing a mortgage adviser next week, but wanted to do some initial research first.

ACG

I am pretty sure there will be 2-3 possible lenders, but I do not think you are going to get it through on the high street.

Worst case scenario is rates of around 5% mark.

XEO25

Thanks very much. Can you share the names of these 2 - 3 lenders?

Many thanks

onthemend88

Hello

First of all, definitely go through a broker. Between us we have 10 defaults and 5 CCJ's.

Our mortgage hunting started at the beginning of the year when a lovely 4 bed property came up in our area for £90,000. We went to see a broker who was able to get us an AIP with Precise however, the house sold very quickly and by the time our AIP came through, it was too late.

We have now found a new build property that will be completed early next year and I have spoken to my mortgage advisor, who has said that we should be able to get an AIP with the HTB scheme (also with Precise). We could apply for an AIP now but there is no point due to mortgage offers lasting between 3-6 months. Also, if we wait until July onwards, our most recent CCJ/defaults will be 2 years old so the interest rates with Precise will be slightly better.

I would definitely get the default paid off because it will look better to lenders.

XEO25

onthemend88 wrote: »

Hello

First of all, definitely go through a broker. Between us we have 10 defaults and 5 CCJ's.

Our mortgage hunting started at the beginning of the year when a lovely 4 bed property came up in our area for £90,000. We went to see a broker who was able to get us an AIP with Precise however, the house sold very quickly and by the time our AIP came through, it was too late.

We have now found a new build property that will be completed early next year and I have spoken to my mortgage advisor, who has said that we should be able to get an AIP with the HTB scheme (also with Precise). We could apply for an AIP now but there is no point due to mortgage offers lasting between 3-6 months. Also, if we wait until July onwards, our most recent CCJ/defaults will be 2 years old so the interest rates with Precise will be slightly better.

I would definitely get the default paid off because it will look better to lenders.

Thanks very much and good luck with yours!

onthemend88

Forgot to add, some of the lenders that may be a possibility for us include Aldermore, Kensington. Others lenders that were mentioned by our MA that also deal with adverse are Vida Home Loans, Pepper and The Mortgage Lender. Pretty sure they are not limited to these though.

Have a look at their lending criteria online.

Hope that helps.

Thrugelmir

XEO25 wrote: »

Finally, should I pay off the £3,150 defaulted account in full (if possible) before I apply for the mortgage? Would this be a big help or not?

As you are in business. I'd consider this a priority irrespective of the mortgage. How you deal with things reflects on your personally. All the positive things can be wiped away at a stroke.

ACG

As a broker I can not name lenders. Onthemend88 seems to have mentioned a few of them, although some of those mentioned wont do it and there are a couple of others.

In all honesty, all of the lenders I had in mind can only be accessed through a broker so it makes sense to speak to a broker and let them do it for you.

FTBbelle

My partner has 1 default (£650 three years old) and 1 CCJ (2.5 yrs old £140) and our broker said most places wouldn't consider us it's so stressful isn't it! Best of luck with your applications, keep us updated!

XEO25

Hello,

Thanks for the replies - very useful. I have a follow up question...

I have a Help to Buy ISA, opened about a year ago, but no money in there (£0.02).

Am I correct in thinking I can place £1,200 in it today as an initial payment, and £200 per month onward?

So if I deposit £1,200 in June, and add £200 in Jul, Aug, Sep, totalling £1,800, I'll get a 25% bonus from the Government of £450? I plan to apply for the mortgage in Sep 2019.

Thanks