Mortgage with adverse credit - help please

HilaryBriss · 30/07/2020 18:10

Well the defaults are relatively recent and are not satisfied. How much are they for? Also how much are you looking to borrow and what percentage of the purchase price is your 40K?

pinky987 · 30/07/2020 18:15

I would ask the broker if the defaults were paid of does this increase your options.

Skyliner001 · 30/07/2020 18:28

@NLW91

So myself and my husband want to get on the property ladder. My husband has 3 defaults on file which are creeping up to 2 years old. He is in the process of paying them off. We sought advice from a broker 2 weeks ago who supposedly has access to the whole marke and today the broker has come back saying that there’s only 2 lenders he is going to try due to our circumstances. We got declined for an AIP with Halifax today and he’s going to try the other in the next few days. We have been gifted a £40,000 deposit from a family member. What I can’t really understand is why there is a lack of apparently lenders who can help? I’ve done some research and there are numerous lenders who specialise in adverse credit. I’ve read stories of people getting mortgages with IVAs, CCJs and the like on their file. I don’t see how my husband can have that much of an impact when he has nothing like that on his file. Can’t help but feel like we are being fobbed off. We earn £50k+ between us . Is it worth trying another broker or does this sound realistic?

Adverse credit mortgages are notoriously expensive and hard to find. The interest rates will be way over the average market rate for a High Street lender.

The best advice unfortunately is to rent as cheaply as possible for the next four years, stay financially very squeaky clean, and save save save save.

When your credit file clears after 6 years you will have a huge deposit all being well and be able to get a house with no problem at all, Possibly with an extremely small mortgage.

Look at the difference in interest rates on any adverse credit mortgage you get offered, and see how much interest you would actually be paying month by month. Make sure that you think of this when you're thinking about having to expend money on rent.

It doesn't matter whether defaults are paid off or not, you just need to wait for the credit file to be completely clean.

It sounds like very drastic measures. But instead of thinking of it as a bad thing, think about how much more you can save towards your deposit, and how much less interest you will pay overall.

Think about the fact that this might mean you are mortgage free way earlier than you expect.

Also beware arrangement fees on adverse credit mortgages, and funny little clauses like having to take out life insurance with the provider they recommend…

Original poster

NLW91 · 30/07/2020 18:37

Defaults are for around £3k. After the broker looked at both our credit reports when we first approached him (mine is squeaky clean) he said we could potentially borrow up to £200k based on our combined incomes but would need a 20% deposit to help with the credit issues, hence the £40k deposit. He now told us today that we will only be able to afford a purchase price of £160k with the deposit. Just feel it’s a massive drop.

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Keepthepeace82 · 30/07/2020 19:12

I would agree with PP and find out what situation you would be in if the defaults were satisfied. Also I would find a broker that specialises in adverse credit mortgages. We had a similar scenario with 2 recent settled CCJs - (most recent was 18months old) and with the right broker and advice, managed to secure a mortgage at 1.26% for 2 years fixed, with a 20% deposit.(mind you this was in 2017 and the landscape, I imagine, has changed - particularly now). At the time many whole market brokers told us to come back in a few years or said they could try for a mortgage at about 8%. Don't give up there is help out there.

Soontobe60 · 30/07/2020 19:17

How much deposit have you saved for yourselves? It sounds like you may not have actually saved anything.

LST · 30/07/2020 19:21

@soontobe why does that matter? We hadn't saved and got a mortgage accepted with nationwide with 10% deposit in March

LST · 30/07/2020 19:22

@OP can't you use a but of the deposit to pay off the debit.. would that not put you in a better position?

Soontobe60 · 30/07/2020 19:28

[quote LST]@soontobe why does that matter? We hadn't saved and got a mortgage accepted with nationwide with 10% deposit in March[/quote]
Did you have uncleared debt? This is a person who possibly hasn't saved a deposit, hasn't paid off debt, earns a relatively low income and yet was hoping to get a maximum mortgage.

Soontobe60 · 30/07/2020 19:30

[quote LST]@OP can't you use a but of the deposit to pay off the debit.. would that not put you in a better position? [/quote]
It's not just about outstanding debt, it's all about your credit rating.

Skyliner001 · 30/07/2020 19:33

@Keepthepeace82

I would agree with PP and find out what situation you would be in if the defaults were satisfied. Also I would find a broker that specialises in adverse credit mortgages. We had a similar scenario with 2 recent settled CCJs - (most recent was 18months old) and with the right broker and advice, managed to secure a mortgage at 1.26% for 2 years fixed, with a 20% deposit.(mind you this was in 2017 and the landscape, I imagine, has changed - particularly now). At the time many whole market brokers told us to come back in a few years or said they could try for a mortgage at about 8%. Don't give up there is help out there.

This is incredible, who was the provider? Also how much was the debt?

LST · 30/07/2020 19:35

@soontobe DP had an outstanding balance of 400 quid I think it was, which we paid off and we have a 8k loan. I was just wondering if paying off the outstanding debt would help. It's always worth an ask. And regarding the deposit we weren't even asked where it came from! They didn't even want bank statement from our current accounts. Just the account the deposit was held in. We only earn 50k between us too and only had 10%

Soontobe60 · 30/07/2020 19:43

[quote LST]@soontobe DP had an outstanding balance of 400 quid I think it was, which we paid off and we have a 8k loan. I was just wondering if paying off the outstanding debt would help. It's always worth an ask. And regarding the deposit we weren't even asked where it came from! They didn't even want bank statement from our current accounts. Just the account the deposit was held in. We only earn 50k between us too and only had 10%[/quote]
That's very unusual. My DD got a mortgage at Christmas, she had some deposit she'd saved herself, we gave her some more, she had to provide 6 months bank statements and we had to provide a letter to prove the money we gave her was a gift, and also provide bank statements to show where that money had come from.

LST · 30/07/2020 19:50

Nothing like that at all. We thought it was odd too because I assumed they'd ask for current accounts. It was all redundancy money so I don't know whether that made a difference. I gave them my payslip with amount on. I think it will be a lot harder to get a mortgage now with the whole situation anyway. We scraped through in March thankfully.

Keepthepeace82 · 30/07/2020 20:24

@Skyliner001 - mortgage was with the Halifax. It still is with them, as we remortgaged with them last year on a five year fixed. Total across both CCJ's was just under £10k. We did make sure that everything else was squeaky clean, so no outstanding debt on credit cards, overdrafts etc.

Skyliner001 · 31/07/2020 08:04

[quote Keepthepeace82]@Skyliner001 - mortgage was with the Halifax. It still is with them, as we remortgaged with them last year on a five year fixed. Total across both CCJ's was just under £10k. We did make sure that everything else was squeaky clean, so no outstanding debt on credit cards, overdrafts etc.[/quote]
That's amazing. Would you be able to give OP more details like if you approached them direct. What did they say about the CCJs? Etc.

Keepthepeace82 · 31/07/2020 15:35

@Skyliner001 of course. @NLW91 as above, we used an adverse credit broker (sorry didn't share the name - Just Mortgages). They did charge us a fee but this was a fee based on our house purchase price, the cheaper the house, the cheaper the fee.
We had to make sure we had no outstanding debt or if we did, provide proof that it would be paid before a mortgage offer, adverse credit was settled, 3 months worth of bank statements, pay slips etc, we could borrow up to 4.5 times our joint salary. We needed a 20% deposit minimum. This was in 2017, so not sure what the situation would be now and whether there would be new or different restrictions but its worth a try.

Original poster

NLW91 · 31/07/2020 15:47

@Keepthepeace82 thanks for the info, I’ve approached a couple more brokers who specialise in this as I feel we need a couple of extra pairs of eyes to look into this. I’m not giving up, that’s for sure! X

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