Clearing balances on defaults and missed payments

Dinosaur1

Hi, i have £44000 of debt and have £78000 in cash from proceeds of house sale. 

Tesco loan £25400 in default jan 22
debt collection agency £5600 in default sep 21.
mbna £13000 2 recent missed payments. 

My question is would it be worth settling in full as I would like to get another mortgage with my partner or offer partial settlements because it won’t make any difference to my credit file. 

A mortgage adviser recommended paying off in full and should still be able to get a mortgage. Has anyone got any experienced with this?

Thanks Marc

[Deleted User]

Full or partial will make little difference, as long as they're settled.

Dinosaur1

Ok thanks 

longjohnjohnson

Dinosaur1 said:

Ok thanks 

Which is to say almost no l lender will touch you with a recent default, regardless of whether it's paid off in full or not.

It may matter for future applications.

Dinosaur1

I suspected that may be the case and would probably be better off offering them partial settlements as it probably won’t make a difference.

Dinosaur1

Am I right in thinking that even if I offer partial payments that these  will eventually drop off my credit file anyway. Or if I make full payments then I may be able to get mortgage in 2 or 3 years. It’s confusing as there is nothing set in stone.

[Deleted User]

Rules are that 6 years (5 in Scotland) they are wiped, regardless. A default will disappear 6 years after the date it was defaulted.

A settled in full is better than a partially settled account and the lender (and their group) will not be likely to lend you money if you don't pay in full

Dinosaur1

Thanks for that, sounds like the mortgage adviser was correct. I was told that if I clear balances in full then there may be alternative lenders albeit with higher interest that may accept me for a mortgage and possibly once my credit file recovers then I may be able to eventually use main stream lenders.

Dinosaur1

I showed the mortgage adviser my credit history and bank statements etc… and all my financial information and she said that even though there are a few issues it’s not insurmountable. I just don’t want to pay in full leave myself short and then not being able to get a mortgage. I just don’t know if it’s risky or not.

simon_or

You could certainly tick the boxes for a specialist mortgage (the likes of Bluestone, Pepper, etc.) even with very recent defaults. However I suspect the size of the defaults will be an issue hence your broker's advice.

I don't think she (or any broker) will guarantee that you'll get a mortgage at the end, so you'll have to decide whether to take the risk or not.

Missmarple

As you have the means to pay, why not make them offers of a reduced settlement to pay in full. It could knock thousands off the debts. The relief to be debt free and start again would probably be my course of action if it is going to make little difference whatever I do to my chance of getting a mortgage.