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  • FIRST POST
    • overchipped
    • By overchipped 7th Nov 18, 1:30 PM
    • 3Posts
    • 1Thanks
    overchipped
    Dual Bankrupts - Probability of a Mortgage
    • #1
    • 7th Nov 18, 1:30 PM
    Dual Bankrupts - Probability of a Mortgage 7th Nov 18 at 1:30 PM
    When the date reaches 01/08/2020 my partner and I will have been discharged from his bankruptcy and my DRO for three years.

    He will have been in his job approximately 2 years and 9 months earning 29,000. He works in insurance.

    I will have been in my job approximately for 1 year and 9 months and will presume to still be earning a minimum of 18,000. I work for a bank.

    We currently have an income after tax before deductibles of about 3,000.

    We have no debt, no loans, credit cards are actively used and paid off every month, we're both on the electoral roll etc.. and are taking our credit file clean ups very seriously, with Equifax all cleaned up, and Experian and Call Credit to be looked at next in order to obtain the same standard.

    I am aware Nationwide are one of the lenders that will consider giving mortgages to people falling within this three year since discharge depending on the applicant's situation.

    Based on a 200,000 mortgage (older property in order to give us a wider choice where we live), we hope to use the "Help to Buy: Equity Loan" scheme's 20% contribution of 40,000, the 12,000 in our "Help to Buy ISAs" (we have one each as suggested to maximise the return), and 13,000 in personal savings.

    Based on this total of a 65,000 deposit (we are willing to commit all of it), we would be looking at requiring a mortgage of 135,00. The LTV would be given this calculation 67.50%, which I have been informed is a fairly favourable figure when attaining lower interest rates.

    I suppose I am looking for opinions as to whether Nationwide's lending criteria (or other lenders that would accommodate our situation) would look favourably upon this application when it got to the underwriters. Their calculator states they would borrow us up to 233,000, though this of course does not take into consideration the three year discharge period since bankruptcy.

    We have the intention of having enough savings by the end of the 5 year period of the government scheme in order to pay it off in full in order to avoid interest rates, this should help to offset the increase in mortgage payments when Nationwide's interest rates increase from their initial offering of 2.1% to their current 4.3% figure. I am aware these figures are subject to change, but we have looked at our finances given this scenario was achieved and we're happy we can afford this commitment.

    I appreciate in advance any help from MSE members on what I have written above. I don't expect an easy ride, but I am trying my best to sort out our future. Criticism is welcomed.

    I am aware of the benefits of using a broker, their fee arrangements, sources of deposit proofs etc.. but like to know if this is favourable situation to be in, could we improve in some way, am I missing something glaringly obvious and so on. The debts that we had written off were never with Nationwide btw !

    Regards

    Ben
    Last edited by overchipped; 07-11-2018 at 1:56 PM.
Page 1
    • marliepanda
    • By marliepanda 7th Nov 18, 1:35 PM
    • 6,851 Posts
    • 14,919 Thanks
    marliepanda
    • #2
    • 7th Nov 18, 1:35 PM
    • #2
    • 7th Nov 18, 1:35 PM

    Based on a 200,000 mortgage (older property in order to give us a wider choice where we live), we hope to use the "Help to Buy: Equity Loan" scheme's 20% contribution of 40,000, the 12,000 in our "Help to Buy ISAs" (we have one each as suggested to maximise the return), and 13,000 in personal savings.
    Originally posted by overchipped
    Not my area of expertise generally, but you cannot use the equity loan on older properties, only new builds.
    • overchipped
    • By overchipped 7th Nov 18, 1:47 PM
    • 3 Posts
    • 1 Thanks
    overchipped
    • #3
    • 7th Nov 18, 1:47 PM
    • #3
    • 7th Nov 18, 1:47 PM
    I suppose if this were the case, the only options that we would have would be reconsider the new build properties that are available, these tend to be far out. Alternatively, slightly increasing the house value to 225,000 which our deposit would give room for, in hope of finding a property somewhere more local (if the underwriters were willing to accept an increased mortgage amount given our affordability criteria). I appreciate the clarification.
    • Thrugelmir
    • By Thrugelmir 7th Nov 18, 2:10 PM
    • 60,994 Posts
    • 54,195 Thanks
    Thrugelmir
    • #4
    • 7th Nov 18, 2:10 PM
    • #4
    • 7th Nov 18, 2:10 PM
    We have the intention of having enough savings by the end of the 5 year period of the government scheme in order to pay it off in full in order to avoid interest rates
    Originally posted by overchipped
    To save 40k in 60 months is a tall challenge, as equates to 667 a month.

    If property prices were to increase in that 5 year period. Then the amount you would need to repay would be correspondingly higher. As the loan is based on property value at the time of redemption. There would be fees that you would need to cover as well to do this.

    this should help to offset the increase in mortgage payments when Nationwide's interest rates increase from their initial offering of 2.1% to their current 4.3% figure. I am aware these figures are subject to change,
    Probability is that interest rates will progressively edge upwards. In the coming months and years. What rates will be in August 2020 can only be subjective guesses. I would suggest erring on the side of caution and using say 3% as a base figure for projections. Then they'll be no unexpected surprises.
    Financial disasters happen when the last person who can remember what went wrong last time has left the building.
    • ACG
    • By ACG 7th Nov 18, 3:23 PM
    • 17,808 Posts
    • 9,595 Thanks
    ACG
    • #5
    • 7th Nov 18, 3:23 PM
    • #5
    • 7th Nov 18, 3:23 PM
    How will your credit reports look?
    Are there multiple defaults on there?

    If so, then I think the combination of bankruptcy, various defaults/CCJs are probably going to knock nationwide on the head. That being said, you have 20-21 months, it might be worth moving your banking over to them to boost your chances of success - but that will only help so much. If you have a lot of adverse on your files then it is unlikely to be enough. There is more to it than just fitting criteria, you have to pass their scoring also.
    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.
    • overchipped
    • By overchipped 7th Nov 18, 4:02 PM
    • 3 Posts
    • 1 Thanks
    overchipped
    • #6
    • 7th Nov 18, 4:02 PM
    • #6
    • 7th Nov 18, 4:02 PM
    I certainly agree on the interest rate change possibility, I am a fairly pessimistic person in general but know we have some flex in our finances. There are multiple defaults on the credit reports that are now classed as "partially settled" as per post insolvency, neither of us ever had any CCJs, and we have a number of active and up to date accounts between us. We're already banking with nationwide and will be opening the savings ISA with them next month in hope that they they can see our commitment to saving as a positive factor in any application.

    If the multiple defaults at the time of bankruptcy that are now "partially settled" were to be a major factor, then I can only think that waiting until the six year mark where they drop off would be our next best course of action, though there would still be the issue of previous bankruptcy and then a requirement for the mortgage to be at a 25 year term and hence higher payments, as we'd be looking at around 60 year old repayment age.

    A positive there would that we would be able to have an extra four years worth of savings meaning our deposit would be 50K. We could then avoid the help to buy scheme in order to look at a wider range of older properties, and given a LTV of 75% based on a 200K property, I would hope we could achieve the coveted lower interest rates. Once more, any advice and criticism is welcome. Thanks everyone.
    Last edited by overchipped; 07-11-2018 at 4:04 PM.
    • ACG
    • By ACG 7th Nov 18, 4:20 PM
    • 17,808 Posts
    • 9,595 Thanks
    ACG
    • #7
    • 7th Nov 18, 4:20 PM
    • #7
    • 7th Nov 18, 4:20 PM
    There are many variables when looking at whether you will be accepted or not. There are 2 high street lenders after 3 years discharged that I know of, there are also other lenders who would look to accept you once discharged for a day and other lenders not on the high street who would look to accept you after 3-4 years discharged.

    Its not a case of 3 years or 6. It is a combination of when you will have your deposit together, what rates you are prepared to pay and then how your case looks. Everything combined will determine what options are available.

    Realistically there are probably not many people who will want or can get a mortgage the day after discharge as the rates are around 6% and the deposit needed is 30%. But the rates and deposit needed come down over time the longer the gap.

    I would just say get your reports ready at 3 years and then see how you get on. But there is well over a handful of potential options once 3 years discharged.
    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.
    • RunningKatie
    • By RunningKatie 10th Nov 18, 12:05 PM
    • 16 Posts
    • 32 Thanks
    RunningKatie
    • #8
    • 10th Nov 18, 12:05 PM
    • #8
    • 10th Nov 18, 12:05 PM
    As I think may have been mentioned the HTB loan is only available on new build properties, if you buy an older home this loan cannot be applied for.
    So if you want to buy an older property then you would need to potentially up the mortgage and/or deposit.
    Lenders may not look favourably on the previous bankruptcies. You would need to have been discharged for a minimum of 3 years, and even then the rates will likely be abysmal with the few lenders that will accept. At the three year point a broker is your best option, they will be able to tell you which lenders may accept based on their relationship with the banks/underwriters involved but you may still struggle until the full 6-year mark. The rates will be much more favourable for you at this point and as you say it's a few more years of deposit saving.


    So far though, you are doing as well as you can, keep using your credit cards wisely using a low percentage of available credit each time and your credit score will continue to look good. If wanting to switch banks at any point it is better to do it sooner rather than later as if lenders can see you are less flighty with changing banks you look a bit more appealing. You can always look at having more than one account and only ever moving one so you have the loyalty with one account whilst switching the other if you feel you need to/ there is a good deal available.
    Working hard to save a giant deposit for the dream house...
    Then taking on a giant mortgage to buy the dream house...
    To then become mortgage free!!
    I work in legal conveyancing but all opinions are my own and should never be taken as legal advice.
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