what mortgage for bad credit?

casandra_2

My son and his friend are joining forces to get onto the property ladder, can't afford to do it independently.

However, although they have 20k to put down as deposit, sons friend is self employed, self certified and has 3 defaults from over three years ago. Debts paid but obviously defaults remain.

They have been offered mortgage with Future, specialists in right to buy bad credit etc., The deal is not brilliant but it will buy them a house, although the arrangements fees etc., are high. Loads of extras to pay.

Questions are, 1. how long do defaults last on credit history. As the mortgage is not good, after a two year discounted period, they will have to either move on and go separate ways, or re mortgage.

2. Would they find it any easier in two years to re mortgage or will they face same problems?

3. Does anyone know of a more standard mortgage company who take the risk of bad credit history?

Added to this most mortgage companies are not happy about mixing self employed, self certified applicants, with the more standard situation of my son, although neither is earning a fortune, my son has paid out over 19k in rent and he is only 25, doesn't make sense.

Thanks for reading

inmypocketnottheirs

casandra wrote:

My son and his friend are joining forces to get onto the property ladder, can't afford to do it independently.

However, although they have 20k to put down as deposit, sons friend is self employed, self certified and has 3 defaults from over three years ago. Debts paid but obviously defaults remain.

They have been offered mortgage with Future, specialists in right to buy bad credit etc., The deal is not brilliant but it will buy them a house, although the arrangements fees etc., are high. Loads of extras to pay.

Questions are, 1. how long do defaults last on credit history. As the mortgage is not good, after a two year discounted period, they will have to either move on and go separate ways, or re mortgage.

2. Would they find it any easier in two years to re mortgage or will they face same problems?

3. Does anyone know of a more standard mortgage company who take the risk of bad credit history?

Added to this most mortgage companies are not happy about mixing self employed, self certified applicants, with the more standard situation of my son, although neither is earning a fortune, my son has paid out over 19k in rent and he is only 25, doesn't make sense.

Thanks for reading

Defaults last for 6 years from the date of the default notice.

If trying again in 2 years and the six years has not elapsed, then it will probably be futile.

Try the brokers Martin recommends. They are whole market brokers and will be able to research all lenders.

Good luck and hope this helps.

ctabuk

Defaults do stay on the file for six years - all lenders in the bracket of Future Mortgages disregard paid or unpaid Defaults when setting the interest rate so the Defaults will not have increased the rate. Self Cert can put the rate up by 0.25% to higher depending on the lender. The % amount borrowed against the value of the property also affects the rate. I've never had a problem with one self certifying and one having verified income.

Right to Buy purchases / self cert / self employed can produce less choice of lender
Remortgage (especially after 3 yrs) produces greater choice, e.g., some lenders such as UCB Homeloans specialise in lending to the self employed who need to self cert but they do not offer RTB mortgages

Lillyella_2

Read about this in the Financial pages of the mail on Sunday, looks pretty good.

http://www.thechelsea.co.uk/html/index_mortgages.html

Lillyella

casandra_2

Many thanks for the advice,

the boys have not got to take up the mortgage for a day or two yet, may be able to improve on what they have so far. Advice received definately makes me think that they should shop around a bit more first. They have used a broker, but I'm not convinced that he has explored every avenue, he wasn't happy about the mix of self certified and verified he seemed to propose that this was a problem in itself. Anyway thanks again

casandra

Conrad

[QUOTE=

3. Does anyone know of a more standard mortgage company who take the risk of bad credit history?

Thanks for reading[/QUOTE]

Many high street lenders are now more accepting of such cases.
A great many brokers I know, immediately turn to 'sub - prime' lenders as its less work and instinctive, but they tend to be brokers who are a little lazy or inexperienced.

I often find high street lenders with prime rates can help in the circumstances you describe. You really want a small local experienced firm, not an Estate Agent broker and definately not a large call centre type operation.

Good luck

BTW, Future mortages usually 'sub - out' the mortage once it starts so the applicant ends up with a general administration company. This can be a horrible experience.

payless

Agreed, from what I see too many brokers, especially the salespeople of larger firms are too quick to justify their placement with "non-conforming" ( aka higher commission) on the sourcing systems criteria , whilst not having the knowledge / will to consider the more mainstream routes first, or even suggesting using own bank - direct