Subprime lending and applying for mortgage

sonyarita

I am just looking for some advice regarding applying for a mortgage whilst having a sub prime lender on my credit report.

I took a loan out with Avant credit (stupid, very stupid I know) in 2017 but stopped paying in Jan 2019. This account hasn't been defaulted and interest is still being added. It is showing as delinquent by one CRA.

I am planning to take over a mortgage on a house my mum owns in December 2023, mortgage will be roughly 25,000. I read on another thread that mortgage providers won't touch you if there are sub prime lenders on your report. 

I guess my question is how will mortgage providers look at this debt if not defaulted but payment not made in nearly 5 years and is it likely I would get a mortgage with this on file as well as 3/4 year old defaults?

ACG

Ignore what you have read. No lender will refuse you because you have a bad credit lender on your credit file. They would be more likely to decline you because of the delinquent account. Chances are you will struggle to get a normal lender. 

MovingForwards

Lenders do not see the name of credit providers, they see the amount lent, how much is outstanding, whether there were late / missed payments, defaults, arrangement to pay etc.

No one can say what criteria lenders will have in a few weeks, let alone a few years.

The older the 'issue' the less affect it has with assessing an application.

What's the reason you have stopped paying it? 

Be aware all mortgage lenders have a minimum amount they will lend, so £25k may be the lowest, but interest tends to be higher, based on current ways of lenders working.

You will need a broker, especially if the debt is rising, not being paid and not defaulted.

sonyarita

Thanks for your reply @ACG. Do you happen to know if I deal with this debt if the status will change from delinquent or is it the case that  once the account is delinquent it stays delinquent, if you know what I mean?

ACG

If you clear the balance it will show as satisfied. 

sonyarita

@MovingForwards thanks for your reply, you have made some good points that I haven't considered.

I stopped paying because change in circumstances meant I simply couldn't afford to pay all my debts. I purposely defaulted on some of my debts to get breathing space and to start again. I am now keeping a diary on DFW to clear my debts and improve my financial situation.

MovingForwards

Your diary will help you stay focused, see if you can save a pound or two each payday towards doing full and finals or towards the costs associated with getting a mortgage (I paid debt and saved at the same time).

If it is a sub-prime lender you do need when the time comes, they tend to have a higher lowest amount they will lend, have a minimum property value and if it's ex-council has a minimum value for that which might differ to a property that never was ex-council, regardless of how many years have past since it was first sold.

You have a few years so can dip your toe in to have a look at criteria, at least you know what you are working towards. But if you look at them now, remember a lot has changed because of Covid.

Good luck 😊