Closed Accounts & Mortgage Application

tanya87

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

MattMattMattUK

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

Thank you! We have £30k deposit and will be going through a broker to help us find the best deals and rates

ACG

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.  

tanya87

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 😊

StephenMortgages

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.