FTB Adverse Credit Mortgage Advice

NatalieanneDFW

Hi Everyone,



I'm in a tricky situation. I am a young, single mum with two children and I really would love the security of owning our own home. I am in a stable job that I have been with for over three and a half years and my earnings including commission work out to be about 20k, this is part time as well because of my children. I also have other income coming in that adds up to around 14K, this is made up of DLA and tax credits so I'm unsure if these are taken into account. This brings my income to around 34k.



The issue is that in 2014/15, I went through a very difficult seperation that resulted in me being left with debts that I was unable to pay. The situation spiralled and I have been on a DMP ever since. I now have just under 3k left to pay which I am going to pay off in the next couple of months as I am able to access funds. Unfortunately, the dmp has left me with several defaults.



Defaults as follows -


PRA Group - Defaulted 09/12/2014 - £270 left (Will drop off Dec 20)



Vanquis - Defaulted - 30/11/2018- £1300 left (was marked as ok until 2018 and then changed to default even though still paying through stepchange) Will now remain until 2024 but will be paid off



Lloyds - Defaulted - 08/12/2014- £1309 left (Drop off Dec 20)



CCJ - £556 - JD 03/03/2015 - Satisfied (Drop off March 21)



Three out of these four defaults will drop off at the end of 2020 and beginning of 2021




I just wondered if anybody knew at what point I might be in a situation to start trying to get a mortgage? I am thinking about possibly buying shared ownership but my understanding is that your credit has to be very good and I will still have one default on my file until 2024. If I can't buy shared ownership then I would be looking to purchase something around the 100 - 120k mark as I don't believe I would be able to borrow more. I think the most deposit I could come up with is 10% but my ideal scenario would be if I could access the help to buy scheme or shared ownership as ideally we need a three bedroom house.



Can anyone advise if I have any hope at all and what the best course of action would be? I am most grateful

FtbDreaming

Id aim for after march 2021 and have the vanquis settle by then too. It seems a long way away but I started sorting out my credit report in 2016 and just getting ready to apply for a mortgage soon. Time really does fly l. Good luck.

MovingForwards

Speak with a whole of market mortgage broker to see what your options are.

RelievedSheff

I would personally let the majority of the defaults and the CCJ drop off your credit file before applying for a mortgage.

Mid 2021 would seem a sensible point to start.

You could of course approach a broker now and discuss your options but I dont think you will have many at the moment and they wont be great rates either.

Aiming for 2021 will give you time to get your finances in better order and also research your local housing options more thoroughly.

ACG

Because of your adverse, you are probably going to need a 15% deposit if you go down a conventional route. Rate wise you wld be looking at something around 3.5% to 4.5% as a ball park (I would like to think the lower end would be achievable). Most of these lenders are not great when it comes to benefits so you may find some of your income is not accepted.

I do not do HTB or Shared ownership, so I am not much use on that front, it could be an option though.

You could do with a Mortgage Broker with experience in adverse though.

NatalieanneDFW

Thank you, Can I ask if I would still need to go down this route in 2021 when my CCJ and defaults have dropped off my report bar the one default which will then be 2.5 years old? I would have hoped that I would have more options by this point in terms of even possible high street lenders as I will have no debt whatsoever just this one default. 15% deposit seems a lot based on just one old default. Thanks again

NatalieanneDFW

Thank you, yes I agree. I think this is a great idea. I'm going to aim for mid 2021

[Deleted User]

One thing I think will be key is managing to pass credit scoring if you do want to go to a more mainstream lender in mid-2021.

With regards to Vanquis - what were your payments from 2014/15 to 2018? If the payments were low enough, then you could ask for the default to be backdated to when you went 3 months in arrears. That's in line with guidance (it is only guidance, but lenders tend to comply)

Low/Token payments won't prevent a default. So if you were paying £5pm but having (say) £30 in interest/charges added, you could argue that the default should actually be back in 2014/15 (when, or soon after, you started your DMP).

What changed in 2018 for them to record a default then and not earlier?

If you manage to get your default backdated, then you only have the CCJ to worry about (after March 2021) which will be a massive help.

I fear a CCJ AND a later default won't look great and won't score great either - even if you can explain it, if it doesn't pass scoring cheaper lenders won't be interested.

Good luck with it all

NatalieanneDFW

Somerset_La_La_La wrote: »

One thing I think will be key is managing to pass credit scoring if you do want to go to a more mainstream lender in mid-2021.

With regards to Vanquis - what were your payments from 2014/15 to 2018? If the payments were low enough, then you could ask for the default to be backdated to when you went 3 months in arrears. That's in line with guidance (it is only guidance, but lenders tend to comply)

Low/Token payments won't prevent a default. So if you were paying £5pm but having (say) £30 in interest/charges added, you could argue that the default should actually be back in 2014/15 (when, or soon after, you started your DMP).

What changed in 2018 for them to record a default then and not earlier?

If you manage to get your default backdated, then you only have the CCJ to worry about (after March 2021) which will be a massive help.

I fear a CCJ AND a later default won't look great and won't score great either - even if you can explain it, if it doesn't pass scoring cheaper lenders won't be interested.

Good luck with it all

Thank you so much, I never thought of this at all! I have already written to them asking if this could be changed so fingers crossed! It would have never of crossed my mind to query it and it could make all the difference. It makes sense because I started debt management in 2014 and for three years, they marked my file saying DM but didn't record as defaulted. I don't believe anything changed in 2018 aside from maybe a new company taking over the account (Moorcroft). Fingers crossed!

The aim is next Summer to buy

[Deleted User]

See if they uphold your initial letter - If not, work out when you were 3 or 6 contractual payments behind and then put in a formal complaint.

6 months might be better to use, if that's before March 2015 - you could use that so it doesn't look like you're "trying it on" so to speak. 6 months is so significantly in arrears they'd need a very good reason to keep reporting negative information for such a long time afterwards.

It seems like you're being penalised for attempting to pay over several years (and ultimately bringing your balance down) which certainly isn't in line with TCF, so I think FOS should uphold. I'm sure there's some precedents on the FOS decisions site too if it gets to that stage

It's not the end of the world if you can't get it backdated as there would still be lenders out there for you, especially if you got a broker to explain the situation - I just think if you can push for it to be backdated it'll make the process easier.

Check files at all 3 CRAs too as sometimes different information is recorded on different files.

Asher247

Hi I am looking. For help on mortgage we got an AIP FROM Santander  joint income of 85k , 23k car finance and 7k credit /store cards.my husband has never had a late payment and has excellent credit score however in the last 3 years I have been exceptionally good not so much as a payment late however previously I had to AP’s on account and  a marker 6 late payment for a close account. With a balance (was paid off 2017) . The house is 135k and we have a 20k deposit (equity)I am so worried to go to the full application

any help greatly appreciated