Broker or no broker? Halifax mortgage with past default

KieraG

Hello!

I am wondering if I could get some advice on what to do.
Myself and my husband are wanting to buy a home- hopefully all being well to go through with an application around March of 2020.
We would be wanting to put down about 10% and buy a home of £135-145k.

My credit score is good, and I have no blips or bad marks at all.
However, my husband had some issues in his past and has a line of PDL use from 2015-2016 due to living with and having to use a lot of his income to help his sick Mother. The last loan he took was in September 2016, so as of our approximate application date he will have had no PDL's for 3.5 years.
He also has a satisfied default from an old phone account settled Jan 2016. It was only £21 and he has a good explaination as to why it occurred as they were sending letters to an address he no longer lived at (so by application date it will be over 4 years since this was placed on his account).

He has otherwise managed all other credit well. Has an overdraft he doesnt and has never used, pays all bills on time, including credit card etc. His credit score is currently fair with all 3 credit reference agencies and we hope that will increase over the next 6 months too.

I did a Halifax Agreement in Priniciple quote and it came back approved for a 7-10% deposit on a place of £140k. I rang Halifax mortgage line and they said they don't mind PDLs if they are not currently in use, but my worry is, this was a call centre that seemed to just run off a script and wasn't a mortgage advisor- so I am still scepticle lol.

My question is mainly- how reliable is an AIP and can I stop panicking? We really want to move as we are fed up paying rent. Just want to know what experiences other people have had and if a broker may be the way to go? The last thing we want is to end up with a rejection.

Thanks so much for any help you can give!:)


Kiera

SonOf

Why have the worry? Use a broker instead and a lot of your concerns will go away.

Retired_Mortgage_Adviser

By themselves, payday loans last used 4 years ago and a comms default of £21 from 4 years ago should not stop you from accessing mainstream rates.

From the limited information in your post, I don't see anything which indicates that a half-decent broker can't get you the mortgage you need.

To my mind, there is absolutely no good reason not to use a broker to make sure you are getting the right product and minimising the chance of a decline. If a broker fee is your concern, there are plenty of fee-free brokers suggested on the MSE webpage.

Mortgage_Expert

As a mortgage broker I have seen a trend recently of lenders being very judicious of pay day lending history within the past 12 months, as it can indicate ongoing financial distress or poor financial management. The problem with this kind of situation is that it is still possible for you to have a good credit rating if you have repaid the debts as agreed with the lender/s. This means that on applying for a DIP with a lender you may pass (as these systems are automated), only for the mortgage to be declined on event of an underwriter assessing the mortgage manually. A mortgage broker will search for the right lender for your circumstances. In terms of what I do for this type of case, I always consult with the lender to make sure they are happy before submitting the full mortgage application, negating the risk of disappointment. I strongly suggest you use a mortgage broker.

sal_III

I would recommend to any FTB to use a broker, even for a fee. There are plenty of other stress factors to worry about. After a couple of years when the fix comes to an end and you are more comfortable you can do it yourselves.

Non-standard cases. like yours with lowish deposit and spotty credit file and no mortgage experience - use a broker hands down.

Mortgage_Expert

Hi KieraG, if the pay day loans are over 3 years old the impact is significantly reduced, and in isolation I would not consider them an issue. There will be a certain number of lenders who would not invite your custom, but there are a healthy number of lenders who would not be concerned.

KieraG

Mortgage_Expert wrote: »

As a mortgage broker I have seen a trend recently of lenders being very judicious of pay day lending history within the past 12 months, as it can indicate ongoing financial distress or poor financial management. The problem with this kind of situation is that it is still possible for you to have a good credit rating if you have repaid the debts as agreed with the lender/s. This means that on applying for a DIP with a lender you may pass (as these systems are automated), only for the mortgage to be declined on event of an underwriter assessing the mortgage manually. A mortgage broker will search for the right lender for your circumstances. In terms of what I do for this type of case, I always consult with the lender to make sure they are happy before submitting the full mortgage application, negating the risk of disappointment. I strongly suggest you use a mortgage broker.

Thank you for your advice! So even if the pay day loans were all over 3 years ago (all 2015-2016) then they still cause a big issue?

KieraG

Mortgage_Expert wrote: »

Hi KieraG, if the pay day loans are over 3 years old the impact is significantly reduced, and in isolation I would not consider them an issue. There will be a certain number of lenders who would not invite your custom, but there are a healthy number of lenders who would not be concerned.

Brilliant! Thanks so much! What about the small 4 year old default? Do you think this could ruin things for us?

Mortgage_Expert

I don't know the fuller picture of your finances, but I have helped clients in similar circumstances, with small defaults being deemed acceptable. The pay day loans and small default, in isolation, will not ruin things for you, but you should consider using a broker to make sure your case is placed with the right lender. Your case has a sufficient amount of complexity to justify the involvement of a good broker.

KieraG

Mortgage_Expert wrote: »

I don't know the fuller picture of your finances, but I have helped clients in similar circumstances, with small defaults being deemed acceptable. The pay day loans and small default, in isolation, will not ruin things for you, but you should consider using a broker to make sure your case is placed with the right lender. Your case has a sufficient amount of complexity to justify the involvement of a good broker.

Thank you so much for your help.:A I will reach out to some brokers in my area to see what advice they can give in advance Heres to hoping we will be in our own place in 6 months or so instead of paying someone elses mortgage through rent :rotfl:

sal_III

KieraG wrote: »

Thank you so much for your help.:A I will reach out to some brokers in my area to see what advice they can give in advance Heres to hoping we will be in our own place in 6 months or so instead of paying someone elses mortgage through rent :rotfl:

Doesn't need to be a local broker. I don't even know in which part of the UK mine was based, it was 100% online/phone interaction. I have never set foot in either their, nor the Lender's office.