PLEASE HELP - New Homeowner, Credit Rating Declining, Will This Impact My Mortgage?

1986GOP

I hope someone can advise please. First time buyer, purchased my property in Dec'19 using Help to Buy. (Solo buyer). At this point my credit score was healthy, however due to Covid and issues with income etc, my credit rating has taken a battering since May/June and the reality is it's only going to get worse as I now can't afford to pay my bank loans and credit card. They are unsecured, and I took out the debt when I was in a different financial position, I am devastated that my credit rating is declining but I don't have any other choice and it is going to get worse. I'm wondering, when my Fixed Term mortgage is up (5 years from when I bought my house, so Dec'24), what will a bad credit rating mean for me? I can and will pay my mortgage payments, that's not an issue (at the moment thank goodness). On the provision that I don't default on the mortgage between now and then, what impact will my poor credit rating have? I'm not sure what I need to do at the end of the Fixed Term to be honest, and none of my debts are secured against my home. But I'm really worried about all of this. Any advice is most appreciated. Thank you.

[Deleted User]

Your rating is meaningless. It's not seen or used by lenders.

The problem you appear to have is not keeping up with contractual payments. That's what will worry lenders.

Head to the DFW boards for help.

[Deleted User]

December 2024 is a long way off yet and anything can happen in that timeframe, your situation could well change several more times before then so don't dwell on the negatives because that's not healthy, nor helpful.

A lot of homeowners are having the very thoughts you're having right now and i think a lot of us are critiquing their finances and doing what they can to reduce unessential spending fullstop because for all of us the next year (at the least) is a precarious balancing act financially. 

As @Deleted_User said, slash spending and get your existing outgoings to zero, it's this that will give you peace of mind.

Grumpy_chap

Don't dwell on the mortgage but slash outgoings and get debts under control.  Prepare your SoA and obtain support in the DFW board.  The good thing is, it sounds like you are acting early rather than let issues build.

ObservingAnnie

Grumpy_chap said:

Don't dwell on the mortgage but slash outgoings and get debts under control.  Prepare your SoA and obtain support in the DFW board.  The good thing is, it sounds like you are acting early rather than let issues build.

Thanks, what is an SoA please?

SpreadableToast

Ultimately your mortgage will move over to SVR, with a healthy interest rate increase to boot.
This will, of course, mean your monthly repayments will increase but you won't be asked to repay the outstanding balance or anything like that.  You may struggle to remortgage to fixed-rate deals with other lenders, although if you fix the issue now that may well not be a problem after 4 years.  Your existing lender may allow you to move onto another fixed-term product without additional credit checks anyway so it probably won't be that much of a problem.

cymruchris

If you go through a rough patch now in 2020, the data will remain on your files until 2026 - to the month. So if 2024 is the time you do need to do a deal on the mortgage, the current history will still be available. I would imagine that there will be very many in the exact same position as you right now, and many more to come over the next year. Nobody really knows how lenders in future will 'judge' this period just yet, as none of us have crystal balls, but if we were to base your question on our knowledge of times past, adverse history appearing within 6 years of your application would be visible, and in the present and the past that meant you needed the help of a specialist broker to get the best deal. But like I said - who knows what we'll see by 2024 - nobody yet knows how the financial world will adapt and react. 

sourcrates

ObservingAnnie said:

Grumpy_chap said:

Don't dwell on the mortgage but slash outgoings and get debts under control.  Prepare your SoA and obtain support in the DFW board.  The good thing is, it sounds like you are acting early rather than let issues build.

Thanks, what is an SoA please?

Statement of affairs.
Pop over to the DFW board, look in the sticky, it can be found there under snoozing.com.