First time buyer mortgage advice

jonny411 · 18 November 2019 at 7:22PM

Hi all,

Me and my girlfriend are looking to move in together next year and purchase our first home. We went to a mortgage advisor at the weekend to see how much we could borrow and get an decision in principle for the house we want.

Now the problem we have is that my partner had a poor credit rating due to a defaulted payment in dec 18 on a £1500 overdraft. This meant that the best mortgage the advisor could find was at a higher rate and not with a high street lender which is fixed for two years. She said because the defaulted payment was quite a high amount and less than a year old meant a better deal wasn’t possible. The overdraft has now been paid off.

The advisor said that we could switch lenders after the two year fixed term finishes and go to a high street lender at a better rate as at that point the defaulted payment would be four years old and the fact it was a one off default, means it won’t have as big a impact on an application at this point.

I’m wanted some advise to see if this plan seems reasonable and what our chances would be on switching after two years to a high street lender even with the defaulted payment still on her file for another two years?

Apologies for the lengthy post and thanks in advance!!

ACG · 18 November 2019 at 7:41PM

Default is large and recent as the broker says.
Chances of high street mortgages seems low, but it is a 1 off default and it has been satisfied. There might be a quirky manual underwriting lender who would take a view on it at normal rates. If you have only satisfied it in the last month or so then it will look like you have satisfied it to get a mortgage. If you satisfied it 6 months ago, you stands a better chance.

I think the big questions are:
What percentage deposit do you have,
When was it satisfied?

jonny411 · 18 November 2019 at 8:29PM

ACG wrote: »

Default is large and recent as the broker says.
Chances of high street mortgages seems low, but it is a 1 off default and it has been satisfied. There might be a quirky manual underwriting lender who would take a view on it at normal rates. If you have only satisfied it in the last month or so then it will look like you have satisfied it to get a mortgage. If you satisfied it 6 months ago, you stands a better chance.

I think the big questions are:
What percentage deposit do you have,
When was it satisfied?

Thanks for the reply.

We have around 15% deposit at the moment.

The debt was satisfied more than 6 months ago, at the turn of the year.

jonny411 · 19 November 2019 at 1:26PM

Just a quick follow up to this.

We want to buy a new build so the we don't have to make a decision until march when the plot is released.

My main concern is more around what we will do after the two fixed term is over rather than the initial rate. I don't want to be in a position where we can't remortgage/ switch lenders as the payments will go even higher.

As long as there are no other credit issues in that time, is it reasonable to think that we will be able to switch to a high street lender as the one off defaulted payment will be four years old and settled nearly four years ago as well?

Any other advice would be much appreciated.

ACG · 19 November 2019 at 1:33PM

Probably 80-90% of what we do is bad credit, we have this conversation with most people we see. General rule of thumb is keep your nose clean in those 2 years and you will be fine. Not only will you have a gap of 3 years+ when it comes to the new application in 2 years time, you will also hae a history of making 2 years worth of mortgage payments.

There is no guarantee, but I would be surprised if you could not get on the high street in 2 years assuming everything else is ok.

jonny411 · 19 November 2019 at 2:47PM

ACG wrote: »

Probably 80-90% of what we do is bad credit, we have this conversation with most people we see. General rule of thumb is keep your nose clean in those 2 years and you will be fine. Not only will you have a gap of 3 years+ when it comes to the new application in 2 years time, you will also hae a history of making 2 years worth of mortgage payments.

There is no guarantee, but I would be surprised if you could not get on the high street in 2 years assuming everything else is ok.

Thanks for that ACG, its good to hear. You never know as well by the the time march comes around we might find a quirky manual underwriting lender you mentioned in your first post who offers more normal rates seeing as the defaulted payment will be over a year old and also settled over a year ago.

First time buyer mortgage advice

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