Mortgage with a poor credit score

db1751

Hi everyone, I’m just looking to see if anyone can give me some advice on my mortgage application. 

Due to being an idiot when younger my credit score is poor and there are 3 defaults on it. All of which were settled end of 2017/start of 2018 (using a debt management plan). Since then, I haven’t missed a payment on anything (including a credit card and a loan), have managed to get myself completely debt free and have managed to save a substantial amount of cash in the bank. 

I’m looking for a 75% LTV mortgage using the help to buy equity loan through NatWest. I’m currently earning £44k per year and my outgoings are only £260 a month. 

I spoke to 2 NatWest mortgage advisers who said they don’t see any problems with the application and on the app it says I’m likely to be approved for more than I need. I have an agreement in principle already, just need to formalise the application. 

Am I needlessly worrying or will my previous default scupper my chances even though my financial health is good right now? 

csgohan4

I wouldn't limit yourself to Natwest and suggest a broker who has a larger range of products from lenders

Focus on your history not your score. 

[Deleted User]

Definitely look at whole of market, you've nothing to lose. Ideally through a broker - as the end to that adverse isn't too long ago, it'll still come up in underwriting.

I'm not sure of Natwest's default/DMP adverse policy, doesn't seem to show on their broker site either, but a DMP recently could be an issue. Did you tell the advisers about your DMP? They don't always show up on the credit search correctly. If you've only declared a default, but actually it was a DMP, then it could come undone later on.

If your DMP was just an arrangement to pay (with the individual providers) or passed to a debt collector or similar (Moorcroft, Cabot Financial, Link Financial etc.) then it's not as serious (and likely factored into the credit score).

But if it actually was a DMP (e.g. Payplan, StepChange, Gregory Pennington or similar) you need to be very careful - DMP/IVA/Bankruptcy are often treated similar - and I know Natwest don't take Bankrupt or IVA within 6 years. The last thing you want is an application which knocked back on a technicality when you could've avoided it.

MovingForwards

I would suggest you speak with a broker due to your history. It's too much of a risk trying to do this yourself.

I'm now 'likely' to get a mortgage with NW, my adverse is older than yours but I wouldn't be confident of getting a mortgage with them.

Previously I was 'likely' to get a CC with them, applied and got rejected, it was only when 'highly likely' appeared in the app was I granted one.

There's a huge difference between a few grand on a CC and borrowing 75% of a house purchase, with 20% of that being from H2B, so in effect only 5% is your money.

db1751

It was a DMP set up through Payplan. 

When going for the agreement in principle I was walked through a questionnaire by the person on the phone and it didn’t ask me about having a DMP. 

I will obviously declare it when I have my meeting with my mortgage advisor on Monday. 

I understand it’s my own fault that I got myself into the mess I did a few years ago but I’ve worked hard the past 3 years and have a perfect payment history since paying off the DMP. 

I was told by the bank manager I seen that I was highly likely to get a mortgage for £175,000 according to their system. On my banking app it says I’m likely to get a mortgage for £178,000. I’m looking for a mortgage of £162,500 and the 2 advisers I’ve spoken to don’t seem to think it should be a problem. 

I’m earning £44k a year, have around £23k in the bank, have no debt (no credit cards either) and my outgoings are only around £240/£250 a month.  

I’m just worrying as I’ve reserved a house that I really want and would be really disappointed if it fell through. 

db1751

Also, when I log in to Experian and use their “compare mortgages” section (it says find out which lenders are likely to lend to you), the results come back saying excellent for a Natwest mortgage. 

[Deleted User]

The problem is you have adverse, so however good your situation is now, you still need to meet policy. If their policy is that they don't lend to people with a DMP active in the last 3 years for example (I can't find the information on their site), then you need to meet it (unless they're happy to consider your application outside of usual policy).

Their policy may well be that it's OK subject to scoring, I'd just want assurance from them and/or a broker before going ahead - you don't want to get 2 weeks down the line (or later) and then get declined.

They 100% won't lend with bankruptcy/IVA on file, which is what makes me very wary about the credit score pass you've received so far - something may not have triggered correctly. Of course, it could be that they're fine with the DMP (given your high earnings and the current account account conduct you describe) - but as above, you are in effect going for a 95% mortgage and will normally be scored as such.

Experian and the Natwest app don't mean much at all - especially for mortgages which will be manually reviewed. They're a guide but I'd explicitly ask the DMP question before you submit your full application. Ideally try and get something in writing that they're aware of and happy with it.

The Natwest app last week said I'm "highly likely" to get an OD of just under £2k. A few days later it says "likely" to get £250. A day later it says no (the correct answer!)

As another example of how hit and miss these things are, I've just had a look at Experian mortgages to see what it says.... Mine shows that I'd be eligible with my employer - which I know for a fact I 100% would not be!!

If Natwest can't be done, based on what you describe, I'm sure there will be somebody for you - so I do really hope you get it sorted. I'd personally be looking at a broker though. There may even be rates cheaper than Natwest. I understand you've banked with them, but that loyalty won't get you too far - especially if you can pass a credit score elsewhere anyway.

db1751

Just a quick update on this. 

Had the appointment with the mortgage adviser yesterday and passed the affordability and credit check during the application. 

Is this a sign that everything is ok or are the underwriters likely to decline now? 

FrugalCat

Only the bank will be able to tell - but you should have listened to advice here. A broker would have been able to give you the information you needed beforehand.

If you're unlucky and are rejected, you'll have a rejected mortgage application on your credit file, which is another red flag for lenders.

csgohan4

For future readers a DIP/AIP means nothing until Application is in and decision is given. people can get DIPs and still fail on underwriting. 

OP has not used a broker and limited themselves to a specific bank who are not advisors but rather peddling their own products which may not be suitable given the OP#s adverse history


Good luck OP your going to need it