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Closed Accounts & Mortgage Application

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Hi Guys

My husband and I are looking to apply for a first time buyers mortgage. Both of our credit scores are excellent, we have no existing debt between us other than my PCP car payment which we’ve declared on our MIP and we have a deposit ready to go. We’re eligible for a mortgage up
to £345k but to keep us in our current lifestyle and enable us to still put money into savings each month, we’re looking at properties around the £280k mark. 

My only concern with the application is we have around 8 closed loan accounts within the last 6 years. All accounts are in good standing and none with any missed or late payments. Like a lot of families we struggled at the back end of covid so both took out a loan each and then applied for additional loans to pay off existing ones due to better APR’s. Would these have a negative effect on us when applying for a mortgage? 

I have a feeling the mortgage lenders may look the amount of closed accounts as though we’re poor with managing money or rely heavily on taking out loans. Thank you

Comments

  • MattMattMattUK
    MattMattMattUK Posts: 11,171 Forumite
    10,000 Posts Fourth Anniversary Name Dropper
    tanya87 said:
    Hi Guys

    My husband and I are looking to apply for a first time buyers mortgage. Both of our credit scores are excellent, we have no existing debt between us other than my PCP car payment which we’ve declared on our MIP and we have a deposit ready to go. We’re eligible for a mortgage up
    to £345k but to keep us in our current lifestyle and enable us to still put money into savings each month, we’re looking at properties around the £280k mark. 
    How much of a deposit do you have?
    tanya87 said:
    My only concern with the application is we have around 8 closed loan accounts within the last 6 years. All accounts are in good standing and none with any missed or late payments. Like a lot of families we struggled at the back end of covid so both took out a loan each and then applied for additional loans to pay off existing ones due to better APR’s. Would these have a negative effect on us when applying for a mortgage? 
    No, they will not have a negative effect. 
    tanya87 said:
    I have a feeling the mortgage lenders may look the amount of closed accounts as though we’re poor with managing money or rely heavily on taking out loans. Thank you
    They will evaluate you on lots of different metrics, taking out loans will be one of them, as will be you repaying them in full with no missed payments, which shows that whilst you might have splurged money you borrowed you still paid it back and ultimately that is all that they care about.
  • tanya87
    tanya87 Posts: 3 Newbie
    First Post
    Thank you! We have £30k deposit and will be going through a broker to help us find the best deals and rates
  • ACG
    ACG Posts: 24,551 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    You took out loans and paid it back. Thats good, it shows your a good risk.
    The debts are now closed and no longer a commitment. Thats also good as they will not affect affordability. 

    If anything its probably helping your credit score. 

    You are probably the ideal customers. Good luck.  
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • tanya87
    tanya87 Posts: 3 Newbie
    First Post
    ACG said:
    You took out loans and paid it back. Thats good, it shows your a good risk.
    The debts are now closed and no longer a commitment. Thats also good as they will not affect affordability. 

    If anything its probably helping your credit score. 

    You are probably the ideal customers. Good luck.  
    Thank you for your reply! Much appreciated 😊
  • Broker here - this wouldn't concern me to be honest. 

    As long as you pass credit checks with the lenders you seem in a pretty good position. 
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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