Mortgage with a 4 year default

Rachaellb

Hi there, I’m hoping to apply for a mortgage with a 10% deposit. With our joint salaries we can get up to £215k but only need £124k mortgage so affordability isn’t an issue. Unfortunately I got into some financial difficulties 4 years ago and defaulted on a credit card (£1250) which was paid back in full in 2019 and no other late payments or issues since (48 months) I’m debt free with a credit card I pay off each month and partner has a 6k personal loan with excellent credit. I applied direct to tsb and Halifax and was declined due to credit score. I’m excellent on clear score, good on Experian but needs work on credit karma. All 3 show the default, why is my rating so much worse on credit karma? I’d previously read banks were more concerned about defaults in the last 3 years, has this changed? I then went to L&C in the hope a broker could advise/ direct me better but their online application came back as they were unable to help. I’m at a loss to where to go next. Any help would be much appreciated.

K_S

@rachaellb Were TSB and Halifax both DIP declines?

ACG

Forget the score with the agencies, it is not worth anything. Defaults in the last 3 years are classed as recent, they start to count less once they hit the 3 year mark, but they are still taken into account and you still have adverse, it will show for 6 years. On the upside, you have satisfied it which can make a big difference. 
Speak to a broker. At 90% you will be quite limited, it is probably 50/50 but I would like to think there will be options. 

Rachaellb

@K_S they were both DIPs yes 

Rachaellb

Thank you @ACG so a paid for broker would be my best bet? I’d really hoped being 4 year clean would make a difference but like you say adverse is adverse. Just frustrating as the mortgage payments would be considerably less than the rent we’re paying and I’ve never had any issue with rental payment. 

ACG

It will make a difference, it probably makes you 50/50 rather than maybe 80/20 against. 

Its unfortunate corona has hit as if this had been 12 months ago, I would probably be saying 90% chance of high street rates. 

I think it just needs to be an experienced broker, not necessarily one who charges (I say that as a broker who charges btw), but I think you need someone who knows what they are doing, L&C is a fee free call centre, they need to write a lot of business to make it work, you are not really major adverse, but you are not really their target market. 

Rachaellb

Yes, Corona has helped in one way as we’ve managed to save and got our deposit quicker with no travel costs, holidays...life etc but not when it comes to mortgage applications. Thank you so much for your reply, really helpful.