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AIBU?

Share your dilemmas and get honest opinions from other Mumsnetters.

Original poster

To be terrified how low my chances are?

29 replies

Undercity · 11/02/2022 19:05

I earn around £40,000p.a. on a single salary and am considering a fixer-upper property around the £160,000 mark, with a 10% deposit.

I have just completed my credit check and my score is just under 80%, despite never having had (or needed) credit and never having fallen behind on any of my payments. I can afford my rent and to save an extra £500 pcm comfortably despite all my other outgoings.

And yet, according to the credit check website, my chances of being accepted for a mortgage I'd need are low with any of the bigger lenders. Even my own bank that I've been with for well over a decade.

If someone in my position will, at best, struggle to get a relatively low mortgage with monthly repayments over £100 lower than my rent, how would others who are less well off?

I know the website can only give an estimate, but I really can't afford to go higher and that property would need a LOT of work in terms of decorating etc., which I could easily do month to month, but it's not like I want to buy top range. Am I going to be renting forever due to being single?

OP posts:
Theunamedcat · 11/02/2022 19:10

No but you need to boost your chances my neighbours who actually own there home outright were told they would struggle as a couple with excellent jobs because they paid everything off they needed more of a credit history so they took out a mortgage on there existing home at a good rate that they can port? When they buy the new one they also took out mobile phone contacts to build up a credit history

AlDanvers · 11/02/2022 19:11

@Undercity

I earn around £40,000p.a. on a single salary and am considering a fixer-upper property around the £160,000 mark, with a 10% deposit.

I have just completed my credit check and my score is just under 80%, despite never having had (or needed) credit and never having fallen behind on any of my payments. I can afford my rent and to save an extra £500 pcm comfortably despite all my other outgoings.

And yet, according to the credit check website, my chances of being accepted for a mortgage I'd need are low with any of the bigger lenders. Even my own bank that I've been with for well over a decade.

If someone in my position will, at best, struggle to get a relatively low mortgage with monthly repayments over £100 lower than my rent, how would others who are less well off?

I know the website can only give an estimate, but I really can't afford to go higher and that property would need a LOT of work in terms of decorating etc., which I could easily do month to month, but it's not like I want to buy top range. Am I going to be renting forever due to being single?

Are you going through a broker?
Christienne · 11/02/2022 19:11

despite never having had (or needed) credit

That scenario there can be a killer for credit ratings…

MoonriseKingdom · 11/02/2022 19:12

It sounds like your problem is your lack of previous credit. You build a credit score by having credit and showing you can keep up payments. I have a credit card with a direct debit set to pay in full each month so I never pay interest and have no risk of missed payments. You could consider getting a credit card and use a fee times a month paying off in full each month?

Amibeinghighmaintenance · 11/02/2022 19:13

Find a good broker. Don’t panic! The issue will be that you have t established a credit history. I have a great broker if you want a recommendation pl me. If that’s allowed!! It’s not me! Just someone who I’ve found to be great.

Lazypuppy · 11/02/2022 19:14

Find a broker. But yes if you have never had credit that counts against you

M0rT · 11/02/2022 19:14

Credit ratings are a very poor method of judging people's ability to service a loan, but it's the one the banks have opted into so you need to work with the system.
Get a cc and use it to pay regular costs eg food shop and pay it off monthly, also take out a small short term loan and repay on time.
Both will boost your credit rating.

BestKnitterInScotland · 11/02/2022 19:14

@MoonriseKingdom

It sounds like your problem is your lack of previous credit. You build a credit score by having credit and showing you can keep up payments. I have a credit card with a direct debit set to pay in full each month so I never pay interest and have no risk of missed payments. You could consider getting a credit card and use a fee times a month paying off in full each month?
Exactly this.

How are the banks supposed to judge how much of a risk you are without any information to go on?

Teeturtle · 11/02/2022 19:15

Mortgage providers do not rely that heavily on credit score companies, they will do their own checks. Credit score would be more used for short term unsecured debt.

MatildaTheCat · 11/02/2022 19:16

@MoonriseKingdom

It sounds like your problem is your lack of previous credit. You build a credit score by having credit and showing you can keep up payments. I have a credit card with a direct debit set to pay in full each month so I never pay interest and have no risk of missed payments. You could consider getting a credit card and use a fee times a month paying off in full each month?
Why only use a few times a month? I have a JL CC and use it for all my spending and it’s pain off by DD each month. It wins me vouchers and if I needed a credit score it would be excellent. ( yes, I checked!)
TizerorFizz · 11/02/2022 19:17

Well you could but a flat. Would that be cheaper? Banks might not give you 90 % on a fixer upper either and the hidden costs could well be very high so a very detailed survey is needed. Or buy with a friend or parent? If you had a bigger deposit it would help a lot. And definitely use a broker but you are aiming too high in my view.

WorriedGiraffe · 11/02/2022 19:18

You need a credit history to have great credit. Have you tried signing up to Expedia to see what they suggest? It can show what you can do to boost your rating.

ComDummings · 11/02/2022 19:20

You’d probably be fine if you get a good broker

MoonriseKingdom · 11/02/2022 19:21

@MatildaTheCat - you are right a credit card can be very beneficial but I thought if the OP has avoided credit all this time she might be wary of switching to putting everything on a card.

Original poster
Undercity · 11/02/2022 19:21

I have no one to buy with. No parents or anything.

Yes, I am definitely going to go through a broker; it's how we got a mortgage on a previous house while I was still married.

Kind of makes me wish I hadn't left my abusive ex husband and left him with the house in order to have a stable home for my kids...

OP posts:
Uncomplicated · 11/02/2022 19:22

It seems unfair given you have budgeted responsibly and have never needed credit , however a mortgage company has no evidence you would pay back a large loan if you have never paid back a small one.

Original poster
Undercity · 11/02/2022 19:23

@Uncomplicated

It seems unfair given you have budgeted responsibly and have never needed credit , however a mortgage company has no evidence you would pay back a large loan if you have never paid back a small one.
I understand the argument, but don't see why reliably paying rent every month can't be taken into the same consideration. There is really no difference imo.
OP posts:
formalineadeline · 11/02/2022 19:24

@Christienne

despite never having had (or needed) credit

That scenario there can be a killer for credit ratings…

Yep. You have no evidence of paying debts reliably because you haven't had any.

Do you have a credit card?

oopsyu · 11/02/2022 19:24

I'v never had a credit card but have had a phone contract which also boost ratings. I'v bought and sold a few times and with the credit rating they're more concerned about missed payments than a slightly lower score due to not having a credit card.

Amibeinghighmaintenance · 11/02/2022 19:25

No no. Don’t worry. Honestly I have been through mortgage trauma like you wouldn’t believe - I was just about to exchange before lockdown - it then took EIGHTEEN MONTHS for me to get a mortgage again - I got turned down left right and centre all for ridiculous reasons - but I got there in the end! It would be much more challenging if you had a bad credit record with defaults etc

formalineadeline · 11/02/2022 19:25

Rent is an expense. Your landlord hasn't extended you credit.

FredtheCatsMum · 11/02/2022 19:42

Talk to your bank. See what they have to say, and if they'll give you a mortgage in principle.

AngelinaFibres · 11/02/2022 20:15

@Christienne

despite never having had (or needed) credit

That scenario there can be a killer for credit ratings…

My brother was a bit daft with money as a student so got rid of his credit cards qonce the balance were paid off.For 20 years he only used his debit card or cash and only bought what he could afford. When he came to get a mortgage at 46 his credit rating was very poor.
TedMullins · 11/02/2022 20:28

I completely agree with you that ability to pay rent should be taken into account but the problem here is that you don’t have a credit history - you need to get a credit card and use it or buy some things on finance and pay them off. I earn only slightly more than you at £46.5k and was approved to borrow £180k for a £200k flat in London - I have a credit card which has about £2k balance on it left to pay but even with that debt I apparently have a very good credit rating. Just open a 0% purchase credit card, treat yourself to some new furniture on a John Lewis store card and pay them off over a few months - even that will improve your score.

ffscovid · 11/02/2022 20:52

The problem is you've not had credit. You need to boost your credit file by borrowing (and paying back) money. Interest free loans and credit cards will allow you to do this without having to pay for the privilege.
Also, are you on the electoral roll? That helps a lot too.

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