Remortgage/Additional borrowing advice poor credit

twistedpro

I am looking for some advice and help and my question probably crosses a couple of forum topics. My wife and I bought a house together 3 years ago with a fixed rate joint mortgage and have 2 years left. The money for the property came from selling my house and rental property with a good deposit (35%) and i left funds for refurbishment to the new house.

Unfortunately, due to mental health my partner got themselves in financial trouble with a large credit card debt and loans trying to hide the problem, i was in the dark about this unfortunately and things had got bad before i found out. Upon finding out and getting support for them, i used money set aside for renovations to pay off the largest debts with the highest interest and we put a payment plan to clear the rest of the debt. The last card will be paid off this month, leaving them with no outstanding debt and the money used from savings starting to be repaid. However, my partners credit score is very poor. This has left us short of the money we require for the house refurbishment for work that had been book and a deposit paid for to book a slot

I would like to go ahead with the refurbishment but would need additional borrowing (45k) for the shortfall, i am worried about approaching the bank due to the change in credit score of my partner, i am not sure how this would look or whether it would impact a re-mortgage product when this is due in 18months time. I have never been financially tied and am not sure how this will impact us, mortgage payments were never missed and my earnings have increased during this time. Should i look for a personal loan rather than additional mortgage borrowing, will my chance of a re-mortgage product be impacted?

I am not sure the best way to approach this and how long it will take to improve my partners credit file so we have better options

ACG

So long as your mortgage is paid on time, it wont affect your current mortgage or any product transfer options so no need to worry about that. 

If you have had payment plans then its likely to show as a row of 6s on her credit reports or possibly defaults I assume. That will affect any future borrowing. 

You could find an unsecured loan is a lower rate in the short term, but because of the reduced term, the repayments will be higher. 

twistedpro

Thank you for the response, yes mortgage payments have always been made on time, I am still trying to unravel what was put in place, the payment plans were not official just budgeting that structured the rapid repayment, but i do fear things were in the background that will have impacted future borrowing. I hope it will be managed now but i am not sure how long this will impact us for, my earnings alone are within the mortgage borrowing rate so worse case i could take them off the mortgage

I think an unsecured loan might be the best option to cover this

ACG

She could get a copy of her credit report so you can see what is on there. 
But any future borrowing with your current lender will probably be a no go for maybe 3-4 years (just a guess based on what you have said. 
A secured loan would need to be in joint names and so would also be at higher rates for at least 2-3 years, although they do tend to ignore things after 3 years. But it could be worth exploring depending on the credit report. 

An unsecured loan should be fine. Its not my strong point but some lenders may have issue due to your financial association, but maybe not. 

There should be options but I think for the next 2 years at least its likely to be a secured or unsecured loan which will offer the lowest rates. Unsecured I think is capped at £30k for a term of maybe 5 years. 

twistedpro

thank you for the advice it is very much appreciated

RAS

Pity you spent money sorting out her debts.

If you had severed financial ties other than the mortgage, it would probably have been better to let her debts default as those clear 6 years later. If she has AP markers, those clear 6 years after the debt was repaid.

You might be wise to avoid joint accounts for a while.

twistedpro

Thank you RAS, i was not aware of this. I thought it was better to clear the debts as soon as possible and stop the interest payments and accrual of additional debt. She should be on an even keel now and a blank slate. Sounds like we are stuck for 6 years now