Mortgage Application with Multiple Defaults

mah0109

Hi All,

first time posting!

im looking to apply for a mortgage with my partner (she is an existing home owner and I will be a first time buyer).

her credit record is absolutely clean (£3000 credit card limit which, if used, is cleared in full upon receipt of the monthly statement and also 2 years plus of her own mortgage payments without issue).

unfortunately my credit record is no where near this perfect. I took on most of the credit risk in my name with a previous partner and then when things went wrong I was left with the debt which became unmanageable and subsequently meant I defaulted on all of the agreements.

My worst credit record shows 21 adverse accounts which are as follows:

NOTE - the amounts shown are remaining balances - I am continuing to pay £200 pm in total to clear everything.

OVER 24 MONTHS

Moorcroft (Comms) - 30/08/2019 - £675

Moorcroft (Comms) - 30/07/2019 - £341

(frustratingly these two defaults aren’t as recent as they appear, it was only when sold to a debt collection company that they newly appeared as defaults)

OVER 36 MONTHS

Onstride - 01/02/2019 - 0

Lowell (Comms) - 01/01/2019 - 0

BT - 28/11/2018 - £171

OVER 48 MONTHS

Halifax CC - 24/05/2017 - 0

Halifax Acc - 23/02/2017 - 21131

Lowell (Comms) - 02/02/2017 - 0

BT - 26/10/2017 - 0

OVER 60 MONTHS

Intrum - 07/10/2016 - £87

Hoist - 31/01/2017 - 2581

Orange/EE - 22/10/2016 - 0

Lowell (Comms) - 14/08/2016 - 0

Lowell (Credit Card) - 03/10/2016 - £0

Paypal - 05/09/2016 - £1116

PRA Group - 31/01/2017 - £1601

Link Financial - 03/09/2016 - £3450

Wonga - 28/10/2016 - 0

Lending Stream - 21/01/2017 - £30

Barclaycard - 03/09/2016 - 0

Barclays Partner Finance Loan - 31/01/2017 - 0

Halifax Current Account - 07/10/2016 - £0

MBNA - 01/01/2017 - 0


we are looking at a property worth £350,000 with a total deposit of roughly £70k.
we earn a combined salary of £76,000 (not including my bonus or my partners second job).

As if I couldn’t complicate things further I am due to start a new job in April for a significant pay increase. I’m less concerned about the new salary being used for affordability - my main concern is whether or not I will be acceptable when factoring in everything else.

id like to be applying for an agreement in principle within the next couple of months but the full application wouldn’t be until the end of the year when the house we’d like is built.

I don’t think I’m missing any details but could anyone give me a steer as to whether or not I stand a chance at being accepted on a joint application for a mortgage?

thanks in advance.

themainman84

 I would definitely recommend speaking to a broker who had an expert knowledge in adverse credit applications.

ACG

Because of the adverse, the bigger deposit will help to overcome it. Clearing off £36k would leave him 10% deposit and then he would not be able to get a mortgage. 

Speak to a broker. This should be possible. Rates are probably going to be around the 4-5% mark, but it should be possible. 

MWT

Leaving people trapped in expensive rental accommodation isn't much of a solution either though, attitudes to this will vary strongly between this board and the 'debt-free' board, but if the debt is under control and well managed it certainly is not always good advice to clear the debt if it leaves too little left to form a deposit.

Mahsroh

ACG said:

Because of the adverse, the bigger deposit will help to overcome it. Clearing off £36k would leave him 10% deposit and then he would not be able to get a mortgage. 

Why? (genuine question). If the debt is clear does this not put OP in a better position to get a Mortgage with a 10% deposit? Or is it a case that the credit file will still show multiple settled defaults which would make it impossible to get a mortgage with only 10%? 

(sorry for hijacking the thread, I'm genuinely interested). 

ACG

A credit report with 20ish defaults is not getting a normal rate mortgage regardless even if they have been satisfied. 

In 2 years time when there will only be 5 defaults, all satisfied combined with a 2 year mortgage payment history there is a much better chance of getting high street rates. 

So for now, if the priority is to get a mortgage, there is a better chance with a bigger deposit and unsatisfied defaults than there would be with a smaller deposit and satisfied defaults. 

Mahsroh

ACG said:

A credit report with 20ish defaults is not getting a normal rate mortgage regardless even if they have been satisfied. 

In 2 years time when there will only be 5 defaults, all satisfied combined with a 2 year mortgage payment history there is a much better chance of getting high street rates. 

So for now, if the priority is to get a mortgage, there is a better chance with a bigger deposit and unsatisfied defaults than there would be with a smaller deposit and satisfied defaults. 

Thanks for this. Certainly makes sense. Is there not a "hybrid" option for the OP where they could look to get a Mortgage now with say an 85% LTV which would leave them £17,500 to put a big hole into some of these debts now? Or would a lender just view that as still relatively high LTV with still lots of unsatisfied defaults? 

ACG

If the debts were satisfied today and there was a 25% deposit, I still cant see them getting high street rates. 
There could be the option of putting down 15% and making a dent into the debts but it wont help the rates available. 

mah0109

ACG said:

A credit report with 20ish defaults is not getting a normal rate mortgage regardless even if they have been satisfied. 

In 2 years time when there will only be 5 defaults, all satisfied combined with a 2 year mortgage payment history there is a much better chance of getting high street rates. 

So for now, if the priority is to get a mortgage, there is a better chance with a bigger deposit and unsatisfied defaults than there would be with a smaller deposit and satisfied defaults. 

So do you think my situation would be possible then?

to be clear to the previous posts, I am paying these debts off at a rate that is manageable (having learned from my previous mistakes).
my understanding is that paying them off earlier makes little to no difference to my chances of successfully being approved for a mortgage.

I think by the time I come to make a full application later this year all of the 2016 defaults will have dropped off my file.

ACG

I think it is possible yes. 

Smokey8899

My credit report is not the same as you, but I did have CCJs, and have managed to find a lender with a 90% LTV.

I think as others have said, you will pay much higher interest rates - we’re at 5.19% (but for 2 years I can handle that). and as your deposit is bigger - this may work more favourably. 

Definitely speak to a broker. They’ll be able to put you with the lender who is most likely to accept you. I would also recommend chatting to a couple of brokers to check your options - because we had one “specialist” lender tell us there were no option for us. 

Also I noticed a few of your defaults are communications - especially the more recent ones. Our lender and others too - don’t look at communication defaults - so to them it’s like they don’t exist.

good luck!