A reader asked:
My partner and I have a combined income of £54,000, We have a deposit of £20,000 (inheritance) and are looking to become first time buyers in a new build property at a price of £210,000. We have defaulted debts that are being paid off, and previous history of payday loans from over 2 years ago from a time when our financial situation was much more difficult.
The defaults are now about 6 months old as we started to try and tidy things up when we knew the money was coming to us. We currently owe around £6,000 on the defaulted debts between us, and we have no other debts or finance. I have an active credit card, and we both have a mobile phone contract in our own names, but that’s all.
What are the chances of us being offered any kind of mortgage?
If you want a mortgage right now
Most of the suggestions below will take some time to improve your mortgage chances. If you want a mortgage straight away, you are going to have to go to a “bad credit” broker. This will cost you more in fees – be very clear about what the fees are before you sign anything. Also the mortgage is likely to be at a less good rate.
I have heard some people are told “This will just be for a couple of years, then you can re-mortgage with a high street lender at a better rate.”
Well, perhaps… but you can’t rely on that happening. Your own financial situation may be more difficult in a few years – perhaps you have a baby on the way which will affect the mortgage affordability calculations. Or perhaps the whole economy is going through a difficult time and it’s harder for anyone to get a mortgage.
Paying off the defaults
Paying off the defaults is the first key step towards getting a mortgage. You want to pay them off as soon as possible so a mortgage lender can see that your problems were all in the past.
When the defaults have all been paid more than a years ago and you have had a year free of any credit record problems, you are more likley to be able to get an OK mortgage offer.
If you already have the inheritance in your bank accounts, then it would be best to use some of that right now and repay the defaults, then start resaving the deposit money that has now reduced by £6,000.
Say you can afford to pay £400 a month off your debts – that would take 15 months to clear the defaults. If you clear them now and then save that £400 a month, in 15 months time you will have your current deposit back, but your credit records will be looking much better as you will have had 15 months clear of any problems.
Check the default date is correct
Paying off the defaults doesn’t actually help your credit rating and it won’t make the defaults disappear. They will stay for six years from the first default date.
So it’s worth checking if you think the default date is correct. If any of them should have been earlier, see if you can get the default date changed as that means the debt will vanish sooner.
It also helps if the defaults are older. A mortgage lender would rather see you had problems 5 years ago than problems last year.
Help to Buy ISAs
The best way to build up your deposit again would be by regular monthly saving into a Help To Buy ISA. The interest rates are decent and the government will add on some money when you do buy. As MoneySavingExpert says:
“if you’re a first-time buyer, putting your cash in a Help to Buy ISA before thinking about any other savings is a no brainer.”
So get an ISA each to maximise the help you can get! Whilst you are saving there four good things happen:
- the defaults are getting older;
- your deposit is getting bigger
- you are getting a bonus from the government; and
- it is showing a future lender that your money problems really were in the past and you can afford to put money aside from your income.
Of course during this period you also need to be fanatical about making sure all your credit cards and bills are paid on time. The last thing you want is a new late payment showing on your file! Use your credit card every month and pay it off in full every month.
What about the old payday loans?
If the payday loans are already over two years old, most mortgage lenders won’t care that much about them. And if you are taking the next year to improve your general position then they are getting even older.
However, how much did you use payday loans? If it was a lot for a period, then you should read my article on Can I get a payday loan refund? and see if you might be able to get any compensation. If you do win a complaint about these, the lender will normally delete the record from your credit file – so that might even get rid of some of the defaults.
Any money you can get back will mean you have a bigger deposit – and the larger your deposit is, the more lenders there will be that may lend despite the defaults on your credit records. The same applies to PPI – if you think you may ever have had this on loans, credit cards, car finance etc, then try to reclaim it.
Then talk to a broker
When you have saved your deposit up again and the defaults have got older, you need to talk to a mortgage broker.
Some high street lenders say they won’t consider a mortgage with defaults in the past three years. Some won’t lend to you at all with defaults – you need to avoid applying to these lenders. A broker will be able to advise you – at this point though you shouldn’t need to go to a bad credit broker.
35-40 year mortgages – be careful!
Should you remortgage after a fix ends?
88 ideas that can save you money!
Suzy says
Hi Sara
3 defaults on credit file 1 to be deleted this March 2018, (Zero balance ) 1 to be deleted July 2018 ( Zero balance ) and the 3rd still paying it off to be removed September 2018 ,
I approached a broker who came back with 2 good deals but sadly they cant lend me enough the other one a huge rate of” The indicated interest rate is currently Monthly 0.825% ( APRC 11.0%” which is huge im paying a rate of 4.78 % now so thats loads more.
Your thoughts on this please would be most appreciated.
Sara (Debt Camel) says
How much are you trying to borrow? What is your income? What term mortgage do you want?
Suzy says
Hi Sara
I was trying to borrow 62k income 16k term 12 years , the open default will be repaid on sale
Sara (Debt Camel) says
Your problem may then be the affordability criteria rather than your credit record I am afraid.
Jennifer Jones says
Hello
I’m not proud to say I have the following 8 defaults on my account:
default date settled
15/07/2013 30/01/2017
17/10/2013 31/01/2017
20/11/2013 31/01/2017
18/01/2014 31/01/2017
30/04/2014 28/02/2017
16/07/2014 30/01/2017
16/07/2014 31/10/2014
05/11/2015 ? this is for £10 with EE, I was never aware of it
My partner is buying a house, our LTV will be 60%, to give us a more comfortable sized house we could do with me going on the mortgage to boost us by just 1 x my annual salary £30k ish. My partner has a squeaky clean credit report and has been accepted for a mortgage last year but his house sale fell through.
I have a credit card which I buy one thing a month and pay off in full and my credit score is creeping up every month and I am at the top end of poor (the shame of it). I have also been offered (without requesting) an increase in credit limit from £300 to £800 on my credit card.
Have we got ANY chance of being accepted or should we just stay clear from me being on the application as I don’t want to ruin his chances. A small part of me believes that I am such a small factor in this, and with a 40% deposit they may just overlook me?!
TIA
Sara (Debt Camel) says
I think you need to talk to a good mortgage broker as you have two very different options here. You do need to dispute the EE one asap. Apart from that, your defaults are all over 3 years old and have been repaid for over a year, so a mortgage may be possible.
Natalie Waters says
Thank you for your very quick response. I’ll definitely take your advise and have a chat with a broker, feels like we may have some choices for a change
Sara (Debt Camel) says
The EE default needs to be challenged!
Mike says
Hi Sara,
Me and my partner are trying to get a mortgage for our first house but have a shaky credit history. We have found a house and want to get a mortgage ASAP.
We entered into a DMP 5 years ago and our bank account which was £600 in an agreed overdraft was automatically put into default. We contacted them (after reading your articles) after realising the default date was a year late. I spoke to them this week and they gave me the choice to either move the default back to Oct 2013 or remove it completely. They couldnt tell me what it would be replaced with although we paid the DMP on time and in full each month.
I chose to move it back a year with the thought that next year it would be completely removed from mine and my partners report and we can forget it ever happened. I am now thinking perhaps I have made a mistake. I have one other default that will be 6 years old in August and my partner has no others, although we both have some late payment bits all at least 18 months old from other accounts on the DMP (which is fully paid up). So in theory we would have no defaults after August this year. Did I make a big mistake? I’m thinking I may be able to change it again if I ask VERY nicely.
As an aside – If an account is recorded as “in default”, does any “late payment information” get recorded after that point?
All this is running through my head and i’m at a loss as what to do for the best.
Thank you in advance!
Sara (Debt Camel) says
When was this bank debt, and the other debts in your DMP, cleared?
It’s hard to say what would have been best here as it’s up to each individual mortgage lender – some may prefer no default, some many may have no preference between a default and a long term arrangement to pay. You do need to go through a good mortgage broker, not direct to a lender.
In 18 months time your credit record will look MUCH better because the default has gone than if there was an arrangement to pay. So if you get the mortgage now on a 2 year fix, by the time you remortgage you will have a clean record.
Mike says
Hi Sara,
The bank debt and others were cleared about 18 months ago.
So it sounds like on balance I probably did make the right decision? In 18 months we will be pretty good. Is there any scope in forcing the other one or two creditors on the DMP to put the account in default back in 2013? Should they have done that? There is no question that the credit agreements were broken! They all say 6 or more missed payments on them.
Can I just take this opportunity to say that you are a shining light in the world where everybody is looking to take advantage and make money out of people already struggling. You are a genuine super hero!
Sara (Debt Camel) says
I can’t really say what was best for getting a mortgage now, it is very much down to the preference of the individual mortgage lender. If everything was cleared 18 months ago, I hope you will be ok for a mortgage. It’s a bit late to try to get your credit record “improved” now if you are about to apply. Good luck – come back and say how you got on!
PS I think I need a superhero cape :)
Mike says
Hi Sara, just a note to say that we were accepted for a mortgage by a high street lender at a good rate and are due to move into our first home in a couple of weeks. We are super happy.
Thanks for your helpful advice!
Sara (Debt Camel) says
excellent – out of curiosity, did you use a broker?
Mike says
Yes we did, first we went to a bad one. They were very unprofessional so we went with our instincts and tried another instead and he was fantastic!
Amy Shepherd says
Hi,
I wonder if anyone can help? My husband and I are looking into buying our first home together. He has a very high salary of around 170k (excl bonus) and I have an average one of around 25k. Our divorces and redundancy wrecked our income/opportunity to save for the last 11 years, we are now in a position to purchase a new home with the government help to buy scheme and a 5% deposit, due to our ages we also need to get a mortgage until my husband is 75. My husband has an excellent/good credit score (depending on which site you look at). I however, have a poor/good credit score (again depending on which site you look at) the poor score is due to a defaulted account (Dec 2015) which was due to an oversight when changing across to a different bank account (DD not transferred, old address), it is a blight on an otherwise blemish free credit score and is only recorded as a default by Experian (Equifax are showing it as a settled account). The debt was for £911.06 and was repayed in full in October 2016. My question is 2 fold, do we stand a chance of getting a high street mortgage jointly? And secondly how do I establish if this is a default or just a very late payment? I have tried to get answers from Arrow Global but they have very little information held regarding this account.
Sara (Debt Camel) says
How much are you borrowing? how large is your deposit? does your husband really intend to carry on working to 75? do you really need your salary to be taken into account?
If Experian says it’s a default, that is what it is.
Amy says
Hi, my husband receives as a general rule of thumb a 25% bonus annually we expect to be able to repay the mortgage in 10 years. However, in my husbands’ profession it is not unusual to continue beyond retirement, in fact his boss is 83. We are looking for @ £442000 mortgage, which I believe is approx 2.6 times my husbands salary so I do not believe my salary is important at all. We are able to put down a 5% deposit and are hoping to use the government help to buy scheme for the other 20%.
My reason for asking about Experian is that there seems to be some discrepancies in how this lapse has been reported on different credit agencies coupled with the fact that Arrow Global themselves do not have any evidence that they defaulted the account, it was passed to them as a result of the previous company with whom I had taken a store card went into administration, at which point repayments where up to date and continued to be so for 6 months, seemingly their system held a very old address, we were living abroad and it was essentially it was a perfect storm, of admin errors on their and my part.
Sara (Debt Camel) says
Well the simple thing is for just your husband to apply for the mortgage then. But if the account in question was up to date when Arrow bought it, you could put in a complaint and ask for the default to be removed…though if there were admin errors on your part as well as theirs I can’t guess how strong a case you have.
Amy says
Thank you for your advice.
Lucy says
Hi me and my othe half want a mortgage together (he has one already) we hopefully will have a £55000 deposit (if the house sells for what we want) the house is £289950 my partner earns £37k and 9900k bonus annually I only earn 11k but I have a paid default for £84 from 3 mobile from 4 years ago will I get a mortgage with him? Everything else for the last 4 years is bang on time
Sara (Debt Camel) says
1 small default 4 years ago shouldn’t be a problem – but go via a broker, not direct to a lender. But i can’t tell how large a mortgage you want? or what your partner’s bonus is?
Craig Smith says
Hi,
Im looking to apply for a Mortgage in January, ill have £16,000 deposit But ive got 3 defaults all over 4 years old that are all paid off that was less than £200, i also will have £4,100 in credit card bills and that will be 32% off my credit utilisation and will have 1,800 left to pay on a loan. I currently earn 34,000 a year before tax and would like a mortgage for about £150,000 what do you reckon my chances would be?
Sara (Debt Camel) says
how long ago were the defaults paid off?
You are borrowing quite a lot and still have some unsecured debt – there is a link to an affordability calculator in here https://debtcamel.co.uk/mortgage-with-debts/, have a go at that and see if it looks positive.
Craig Smith says
The defaults were paid off 2014, it would be a joint mortgage with my partner, she has no debts and is on 20k a year
My credit rating at the moment is poor and my partners is stable/good.
Sara (Debt Camel) says
If your partner’s income is taken into account, the affordability should look a lot better. My advice is to talk to a broker as from what you have said there should be high street lenders that would offer you a mortgage on OK (not the best) terms.
Scott Skelton says
Hi Sara
I have 5 defaults on my credit record all repaid in full.
The default dates range from May 12 to June 15. I have 2 due to drop of this year end of May and December. From June 18 all of my defaults will be over 3 years old and all cleared in full.
I have a balance of 2k on a Barclaycard at 0% to 2019. I have not missed a payment in 39 months. I have been offered a house on a scheme in Northern Ireland called rent to own but it has conditions such as it has to be new, be ready to move in. Rent will be 700 a month and 2500 deposit. At the end of 3 years I get an option to buy with 25% of the rent back +deposit as a deposit. Sorry so long winded. My question is do you think I would be able to get a mortgage on my own? I have 15k deposit and earn 33k a year. I’ve had the same job for 23 years. I’m pleased to have been offered a chance on the scheme but I would rather buy on my own if possible.
Thanks for your time
Scott
Sara (Debt Camel) says
Thanks for clarifying the defaults – I have edited your comment to reflect this.
So the defaults will very soon all be over 3 years old. And they are all repaid in full – how long ago was that? If that was more than a year ago, there will be mortgage lenders happy to lend to you after June at an OK rate provided you meet the affordability and deposit criteria.
There is a link to an affordability calculator in this article: https://debtcamel.co.uk/mortgage-with-debts/ I suggest you try that as it goes into quite a lot of detail – many online calculators are useless, too simple and just trying to get you to contact the lender.
In general for anyone over 40 it’s good to buy as soon as possible to maximise the years before retirement. But I know nothing about the Northen ireland Rent to Own Scheme. You may feel that you will be able to save money whilst paying that amount of rent, then you would have a bigger deposit and be in a better position in three years time.
but who knows what house prices will do in three years – Northern Ireland has a property market that has little relation to the rest of the UK and Brexit adds in a big uncertainty factor. You may find you can get much better “value for money” by not buying new…
In the end I think you also have to let the house itself be a big factor. Is this Rent to own house right for you – right size, right position, big enough rooms, if you have a family will this continue to be a suitable house?
Scott Skelton says
The last default was paid in full in dec 17 but it is also the one due to drop off in dec 18. The house is suitable for my needs and future needs by all means but the area would not be choice. I’m currently in shared accommodation which makes it very difficult for my kids (16&11) to stay. I cleared all my debts using your advice Sara and for this I am very grateful. I’m just not sure what road to go down
Sara (Debt Camel) says
So by the start of next year you should be in good shape to get a mortgage. Is there a relative or friend you could talk to about the pros and cons, money isn’t necessarily the most important thing here. Having your kids to stay easily is very important, especially when they are that age as they will be getting more and more outside interests. But an area you don’t like, or where you have a difficult commute can annoy you every day.
Snake23 says
Hi Sara,
I have 5 defaults on my account, all around the £100-200 mark which are all settled/partially satisfied.
These range from 2014 – 2016 with the last being August 2016.
I have had a few late payments since then but nothing major. My partners credit score is excellent.
We are looking at a Help to Buy Mortage for a property costing £299,995, putting down around £20k ourselves, £60k from the government and then around £210k mortgaged.
What are the chances if being accepted? We can use the new builds broker to search for a mortgage…
Thanks
Sara (Debt Camel) says
“These range from 2014 – 2016 with the last being August 2016.” Are those the default dates or the settlement dates?
Snake23 says
Hi Sara, these are the default dates. The settlement dates are in 2016/2017
Sara (Debt Camel) says
Well the rule of thumb is that many mortgage lenders don’t mind if the defaults are all over three years old and have been settled more than a year ago and you haven’t had any other problems in the last year. Unfortunately a few late payments in the last year may well matter even if you think they are minor.
Jane says
Hi Sara, apologies if this not the correct page for this question but I couldn’t find another more suitable one.
In April last year my house was repossessed by Santander. I took them to court to challenge the repossession and with great relief had an understanding judge who ruled in my favour and I got my home back. There were a lot of extenuating circumstances which I won’t go into here as it could get very long. Over and above these circumstances the Judge felt Santander had not dealt with process properly.
Once I was settled back into the house I started looking at my mortgage account and notice huge fees had been added tom my mortgage totally more than £2,000 which they added to my account even tough when I asked they wouldn’t add my arrears of £500 to my account to help me out. Some of these charges where for repossession costs and I was notified in writing however after I returned to the property more charges where added which I’ve never had notification about. Would I be able,to claim some,of these charges back seeing as I won my case or should I let sleeping dogs lie? Your view would be very much appreciated.
Sara (Debt Camel) says
I think there is no harm in poking this particular sleeping dog. If the judge’s decision is that the repossession should not have happened, then why should you have to pay their costs for it?
You could put in a complaint and ask for the relevant costs to be removed, then take it to the ombudsman if they refuse. This is a pretty unusual case, you may think you need some help with this complaint. You could draft it up and then take it to your local citizens Advice or a Law centre and ask if they could review it.
Jane says
Hi Sara
I had my house Repossessed in April last year by Santander but I took them to court to challenge them and won????. I gained access in June and moved back in July after having to pay for water to be restored and heating system recommissed . The Repossession has appeared in my credit report. Will this drop off my report after 6 years like other accounts or is it on there for longer or permanently?
If it does drop off will it still be difficult to obtain another mortgage if I want move o remortgage?
Thanks in advance
Jane
Sara (Debt Camel) says
Having a repossession marker will make it VERY hard to get a new mortgage or remortgage elsewhere. It should drop off after 6 years.
I think you should email Santander and ask them to remove the Repossession marker from your credit record as you won the court case and went back, so there was obviously something very wrong with the repossession to start with. If Santander refuse, take this complaint to the Financial Ombudsman and say it is unfair that you should be penalised fro something that the cosrt says should not have happened.
Jane says
Hi Sara.
Santander have now removed the Repossession marker and it was really good to see it gone from my credit report. All that is on my record now is the arrears last year.
The charges, fees etc added to my mortgage account run into thousands. This really makes me angry because when I approached Santander about help dealing with the arrears I asked them to add arrears totalling £500 to my mortgage account so I could afford to start a fresh they refused. They were happy to add thousands of pounds of their fees and charges but didn’t want to add a few hundred to help me keep my home.
In addition to these fees I had to pay out for alternative accommodation, furniture storage fees, court fees to challenge them in court and then I had to pay for the heating system to be recommissioned.
Steve says
Hi,
I’m in a meltdown!!
So my credit rating is poor, some financial difficulties when business took a down turn.
During that time I had 2 defaults, so both are around 15months ago.
I’ve managed to turn the business around, now doing around 300k profit per annum.
Now I need a mortgage, as I stay in a flat and have a baby on the way we need to sell the flat and get something more spacious.
Getting together a deposit of around 40k isn’t a problem, and I’m looking for a house in the region of 200k
Can you advise me on my best course of action/chances?
Thomas says
I’ve just been refused a mortgage at the last hurdle due to a defaulted student account 5 years ago with a £2k overdraft I was never notified it would be closed however RBS say they sent letters at the time it was settled within 12 months and I’ve not missed any payments since then on anything. What are my best options moving forward? Thanks
Sara (Debt Camel) says
So this default was repaid in full 4 years ago?
Thomas says
Yes it was paid off in full by 2014
Sara (Debt Camel) says
Then I suggest you talk to a mortgage broker asap as if this the only problem with your mortgage application there shouldn’t be a problem finding another lender.
Thomas says
I went through a broker initially and he sent the application to Santander on my behalf got the AIP and had the survey done then the underwriter said no at final decision. What do they think the chances are in your professional opinion of being approved elsewhere?
Sara (Debt Camel) says
I’m sorry you need to ask your broker. If you had told him about the satisfied default he should have suggested you apply to a mortgage lender who wouldn’t mind.
Carol says
Hi.
I have two unsettled defaults on my credit report. One from 2014 and one from 2015. The total amount is 15,500. I’m paying £50 per month to a debt collection agency. I have offered £6000.00 as a settlement figure but they have refused on the grounds that I own a house outright. I need to move to a bungalow next year as I have mobility problems and would need a small mortgage to facilitate the move. Would any brokers consider this despite the unsettled defaults?.
Emily says
Hi Sara,
Me and my husband have put in an offer on a property. I have an unsettled default of £54 on my file which is 6 years old In August (I was going to settle but was advised not to as it would begin the 6 year cycle again a silly petty amount I know and I’ve kicked myself ever since but o was at uni and didn’t have 2 penny’s to rub together) other than that and the odd late payment back then my credit has been stable. I have 2 credit cards with available balances of £3200 Halifax and a Barclay card which have just said they are increasing my limit to £4800 and I have a balance of £1350 interest free on that one. My husband has had a debt management plan (although he had not defaulted up to taking the plan out he felt he might so opted for this, he never missed a payment on the plan or before that) this was settled back in late 14 / early 15 I believe. he also has 2 credit cards one with an available balance of around £4000 and another with a balance of £2350. The house we have put an offer In is for £163000 we will have a deposit of £16300 the mortgage broker is through the estate agent so the fees are around £500 she has said she doesn’t think the default will impact too much (I forgot to mention my husbands DMP so I will when I see her before she applies for a MIP) my husband is on £24300 per year and I currently on mat leave will have earnings of around £8000 we also get tax credits and obviously family allowance what do you think our chances are?
Sara (Debt Camel) says
“I was going to settle but was advised not to as it would begin the 6 year cycle again” huh? whoever told you this, it is nonsense. It is a great shame you didn’t settle this years ago.
I can’t guess what your husband’s credit record looks like – you need to check urgently with all three credit reference agencies: https://debtcamel.co.uk/best-way-to-check-credit-score/
“the mortgage broker is through the estate agent so the fees are around £500 she has said she doesn’t think the default will impact too much” it is also a shame you haven’t found yourself a broker who doesn’t charge a fee.
Emily says
My husbands score is stable and mine is not far behind that. On credit club and clear score my default shows as settled, on noddle it shows as open. Other brokers I looked at charged £300 + and I just figured if the estate agents stand to make two lots of commission they would work that bit harder to secure both (I could be wrong) not to mention we’ve gone from waiting a few months longer to apply to applying asap as the house we were eating for has been reduced so to secure we need to move fast. I wish I had settled the debt but with it coming up to the 6 years next month it will be statute barred so there’s no point now. So how badly do you think it will impact in your opinion?
Sara (Debt Camel) says
That depends on how good your broker is at finding a lender who won’t mind the default… many lender would be likely to reject.
Emily says
Is that because the default is not satisfied that lenders would reject? I’ve read that anything after 3 – 4 years they aren’t as strict? Do you think us just applying in my husbands name with his settled DMP would be a stronger option?
Sara (Debt Camel) says
Many lenders don’t mind defaults over 3 years if they have already been settled, but most prefer them to have been settled a year or more ago… so you have resolved old problems and not had any new ones for a year. Can you husband pas the affordability test on his income? You really need to talk to your broker about your options here, generalities from me are not much help when you are applying to a specific lender.
Jemma says
Hello, my partner and I are looking to get a joint mortgage as first time buyers. My parter took out two loans mid 2017 and they ended up defaulting. We paid them off in full around 1 month ago. His credit score is currently poor and mine is excellent. We have a 10% deposit saved for a property we have seen valued at £180000. He also has an annual salary of £28000 and mine is £16000.
He also has another loan but he has been paying monthly payments on time. How long would we roughly need to wait before seeing about a mortgage?
Thanks
Sara (Debt Camel) says
Probably 2 or 3 years with no new problems appearing on his credit record – his problems are very recent!
Kim says
Hi Sara, me and my partner are first time buyers hoping to apply for a mortgage. His credit score is excellent, mine is poor. I had a default £489, which i paid off in full in june 2018. I have no other debts, but have had 2 late payments in April and May of this year due to moving house, it was quickly paid as soon as i realised. We have no outstanding debts. We are looking to buy a house at £95,000 we have £15,000 deposit plus we have a help to buy ISA each, his has over £5,000 in it and mine has £1600. Do you think we could get a mortgage? I earn £22,000 and he earns £15,000. I dont want to hurt his credit rating in anyway, any help or advice would be appreciated. Thank you.
Sara (Debt Camel) says
You could talk to a broker to see if he could get a mortgage in his own right, without you being named. But it looks thin on the affordability front. But your recent problems and only just having cleared that default mean that you will find it VERY hard to get a mortgage at the moment. It may be better to wait a year.
Lisa L says
Hi
I have applied for a mortgage and my offer approved. A default has shown that is due to drop off my credit file in Oct 2018. I have contacted the company and Experian as there was disputes and complaints put in about the company in 2011 and I was under the impression this debt had been wiped as a GWG for the hassle. That seems not to have been the case and now I’m waiting to see if the company will allow Experian to remove this. Any idea what the chances of this happening is? It is due to come off in 3 months. Or have I opened a can of worms?
Sara (Debt Camel) says
It is a great shame that you didn’t check your credit records before applying for a mortgage. I can’t really guess if the company will agree that the default should have been removed earlier.
Lisa says
Thank you for your reply, I check my reports religiously, this one was for an address from years ago that I hadn’t put on my file. Talk about surprised! and with having the assurances back then, I didn’t expect it. I’ll need to keep my fingers crossed they are feeling generous
Chris says
I thought that as it is over 3yrs old that the chances of that affecting a mortgage application are minimal. If it’s due to drop off in October it’s been 5yrs 10months and shouldn’t really affect it. Correct me if I’m wrong.
Sara (Debt Camel) says
You are replying to Lisa’s comment? An old default wouldn’t normally matter provided that the debt has been settled, many lenders wanting this to be more than a year ago. It sounds as though this old debt was disputed so it hasn’t been settled.
Jade says
Hi,
I have just came across this forum and I am wondering if you could give me some advice. Myself and my partner are looking to get a mortgage as first time buyers. I earn around 27k and my partner earns around 30k. We have a deposit saved of £20,000 and have both been saving within an ISA savings account. My parnter has a very good credit history however mines is poor. My credit score is currently sitting at fair (799 out of 999) with Experian credit.
I have 5 defaults one being for a moblie phone contract and the other 4 with payday loans which were all defaulted in 2014/2015. These were all paid off and settled 2-3 years ago apart from one which was cleared last month. I have a mobile phone contract and a credit card which I pay off every month and I also have an overdraft which I have avoided using in the last 3 months. Is there any chance we will be accepted for a mortgage and if so at a decent rate?
Thanks
Sara (Debt Camel) says
“These were all paid off and settled 2-3 years ago apart from one which was cleared last month.” oh dear, it is that last one that has only just been repaid that could prove your biggest problem…
Was this recently settled default one of the payday loans? If it was, read https://debtcamel.co.uk/payday-loan-refunds/ and put in an affordabilty complaint to the payday lender 9not any debt collector it ended up with). You may be able to get a refund which would be nice, but more importantly for you, you may be able to get the default deleted if the loan is determined to be unaffordable. But you just need to make a standard affordability complaint, don’t say you only want the default gone, that is less likely to work!
Also complain to the other payday lenders with defaults – getting some of them removed would also be good. My guess is your Noddle credit report is looking a lot less healthy that your Experian one as some payday lenders don’t report to Experian.
Mike Smith says
Hi Sara,
I have a settled delinquent account (it was a water bill) that was delinquent for around 8 months all showing status 2. This was 3 years ago amd settled amd closed 3 years ago. and all my other credit is clean. Looking to apply for 250k with my wife, she has a good rating and we have 40k deposit and joint income of 72k. Will the delinquent settled account rule us out of any mortgage in your view?
Sara (Debt Camel) says
You should be able to a mortgage at an OK rate with a high street lender, but you need to go through a good broker, not apply direct in case you pick one who will care.
Tracy says
Hi Sara
My partner and I are buying a house together and I’m selling mine which allows us to put down the 15% deposit comfortably. He has a good credit rating, I have two defaults registered in 2014 on unsecured debts, overdraft, small loan and a catalogue account. I worked hard and paid them if in full well before and arrangements to pay terms ended. The last account was settled 20 months ago.
We have a pen agreement in principle with Halifax. I’m concerned the mortgage won’t go through. I’ve had my current mortgage for 19 years and a second mortgage for 12 and never missed a payment and have credit cards and car finance. Do you think the defaults will rule us out for a mortgage.
Sara (Debt Camel) says
Assuming you pass the affordability tests, you should be ok with some lenders. I can’t comment on the Halifax, you need to talk to a broker who does this day in, day out and has a good feel for what each lender’s policies are.
Tracy says
Thanks Sara. We’ve gone though all the usual stuff with the broker, and Halifax have done the credit checks as they’re on both our credit reports.
The mortgage they’re offering is way less than my current mortgage and second mortgage combined so here’s hoping.
Thanks for the advice 😊
Sara (Debt Camel) says
Good luck – come back and say if it went ok?
Tracy says
Everything went through without a hitch! ☺️
Jeff says
After plenty of advice and information from here, i
Currently have a mortgage. Took a 5 year fixed out with Natwest. 1 year into it.
Where do I stand if I wanted to buy another house, do I need to take out another mortgage, sell my house etc. Or could I sell my house and take extra on top of my current mortgage to buy again. Obviously selling my current house.??
Sara (Debt Camel) says
If you are selling your house, you will need a new mortgage. The only exception here is if your mortgage is portable AND you don’t need a bigger one – in that case you should be able to move it. As you are only a year into a 5 year fix, you will need to pay an extra fee for ending the mortgage now. Ask what this is – it could be large!
If you are not selling your house, you will need to talk to a broker about your options and you will probably need a LOT of equity in your current house to be able to do this.
Anita says
Hi Sarah. Can you please advice. I claimed my Ppi and got a refund some time ago. Today I got an phone call from some people saying I can claim more from the bank even if ppi claim was successful. Would you mind to put a light on this please. Thank you
Sara (Debt Camel) says
“A phone call from some people” is that a Claims Company? If so they are just phishing for business, hoping you have other PPI still to be refunded with no knowledge that you have.
If you had a PPI Claim paid by a bank then it would be VERY unusual to be able to get more, only really if bank had made an error in which case it would be the bank sending you a cheque for the extra.
The important point is that if you had a PPI Claim rejected then you may now be able to get some money from the new “plevin” rules. But not if you had one paid. See PPI deadline and the new Plevin Rules for details.
Sean says
Hi Sara I was wondering if you could help. I have 5 defaults on my file, all between 4-4.5 years old. All were settled around that time, so about 4 years apart from 1. One default that I hadn’t noticed is showing up for £200 and it is dated July 2014. I intend to pay this. Am I right in thinking that despite this being over 4 years old, which would usually minimise damage for lenders, in this case it will be harmful as it is only just settled?
Is there any scope for me when contacting the debt holder and asking them to remove the default if I agree to pay off in full?
Sara (Debt Camel) says
Yes it will harm your chance of a mortgage. No there is no way the creditors is likely to agree to remove the default. What sort of debt was it?
Sean says
Thanks very much for the reply. Yeah I thought as much. My wife could get the full mortgage in her name so we are lucky in that sense.
If I pay this now will it definitely drop off in July 2020 despite only being settled now? And if so do you recommend just keeping clean and staying clear of mortgage applications until then?
It was a payday loan
Cheers
Sara (Debt Camel) says
The debt and the default will drop off in 2020 whatever you do, whether you pay it now in full, settle it partially, start monthly repayments or ignore it. (Although if you ignore it you could then get a CCJ which would be 6 years more bad news!)
If you settle it now, then you would have a good chance of getting a mortgage at an OK rate in a year’s time.
BUT as it’s a payday loan – look at whether you can make a payday loan affordability complaint! See https://debtcamel.co.uk/payday-loan-refunds/. If you win this, the default should be removed from your credit records.
Bubblepop says
Hello, me and my partner are going for a mortgage together, we have a deposit of around £35,000 and house price is up at £165,000.
I have a satisfied default account from 2 years ago, and some late payments from over 2 years ago…. my partners credit file is squeaky clean..I’m just worried it’s going to go wrong. We have a DIP already.
Sara (Debt Camel) says
Was the lender aware of the defaults before you got the DIP? Are you going through a broker?
Bubblepop says
Yeah the lender was aware of the default, it will be 3 years old in March 2019, My other late payments are over 2 years old . Yes we are going through an broker.
Jon Wallbank says
Hi
My partner and i are after a mortgage she has a clear credit score and has a salary of 20k a year.
I on the other hand have poor credit rating and have 2 defaults (both over 4 years old) i have a loan for £8000 and a loan for £2000 and have £5000 on credit cards with a utlisation percentage of 40%. We have a deposit value of 20k.
Sara (Debt Camel) says
Have your defaults been repaid? If so, when?
What is your income and how much do you want to borrow?
Jon Wallbank says
Settled in 2013 both of them.
My income is 35k and looking between 140k and 160k
Sara (Debt Camel) says
Well the old defaults shouldn’t matter too much if you go through a good broker, not direct to a lender.
You owing more than 50% of your income is less good though and it may impact on the lender’s affordability calculation. Time to blitz that debt down?
Jon says
Yh i agree. We are applying for a mortgage in new year how much debt would i need to shave off l?
Sara (Debt Camel) says
That I am afraid may depend on the lender you are applying to, also all your other financial commitments. Why don’t you work through this calculator here https://www.nationwide.co.uk/products/mortgages/our-mortgages/mortgage-calculators/mortgage-affordability-calculator which is more detailed than most of the ones on the internet and see how much it would lend you at the moment?
But if you have money to spare after your deposit and purchase costs, then clearing the 2k loan and the credit card would be good idea!
David G says
Hi Sara,
I have 7 defaults listed. Three to drop off in 2020.
Looking to get a mortgage but my credit rating is poor but shows as stable.
I have £12,000 for a deposit and the value of the property is £119,000 and I earn £26k.
The defaults are from 2013 – 2016 and haven’t been settled. Do you advise paying them? The later ones will drop off in 2022.
Thanks :-)
Sara (Debt Camel) says
yes – you won’t get a mortgage with unsettled defaults on your credit record. You will find it difficult to get a mortgage at an OK rate of interest if the defaults have only recently been settled as the article above says- talk to a good broker.
David G says
Do you think it’s best waiting until 2022 until everything is cleared? I’m up to date on my current bills etc
I’ve spoken to an airline broker and he just mentioned that lenders will look at me if the defaults are 2 years old from from the date they were listed.
I’ve got over £15k and I’m also doing a help to buy ISA through NatWest.
Monica says
Our mortgage deal is going to end in May and we need to remortgage our house. My partner is unemployed and I earn £30k per year. I have got a poor credit score, and some defaults on my credit file, my partner who does not know about it and about my debts has got an excellent credit score, but he’s been unemployed for the last 4 years and I am the only person who works in our household. We have got a current mortgage with Virgin Money and free advice from a broker. My partner has found a good deal with Nationwide and I am scared that if we use the broker review we will be declined because of me. Would it be better to use the same lender and stay with the Virgin Money. What are my options? Would I be able to remortgage my house? Pleasel let me know. Thank you in advance.
Sara (Debt Camel) says
Read https://debtcamel.co.uk/fixed-rate-remortgage/ which looks at your remortgage options. It may be possible to get a new fixed rate from Virgin without a full credit check.
But honestly it may be better for you to talk to your partner about your credit record problems. It will be less of a shock if you tell him than if you get declined for a mortgage.
Andrew says
Hi Sara,
I took out a life insurance policy via a broker and the policy was set up. After a week it seemed I had a bad deal so I didn’t sign the credit agreement. I had a couple of letter saying may be cancelled if o didn’t sign the letter. I didn’t sign so knew it would just be cancelled but 3 months down the line I’ve received a letter from the insurance company (not the broker) stating I’ve broken the credit agreement and now have a default against my account. Can they do this? It looks like I have a live policy with the insurers , but I’d didn’t sign a Direct debit mandate or anything?
Sara (Debt Camel) says
You should have told them you wanted to cancel – there may have been a “cooling off” period in which you could do this. I suggest you go to your local Citizens Advice with the paperwork and ask them to help you.
Jeff says
I had 2 maybe 3 on mine that were settled but over 3 years old. I was accepted with Natwest.
Amanda Ramsay says
Hi Sara,
I am looking for some advise, me and my husband are looking at buying my parents house from them with them giving us gift of equity as our 5% deposit, i earn £25750 gross and husband is £32682 gross, my question is on my credit file i have AP markers as follows
Vanquis credit card
AP x 3 July august and sept in 2016
I have 1 late payment in 2016, 2 late payments in 2017 and 1 in may 2018
Mail Order account
AP markers from Jan to sept 2016 account settled and closed in 2016
Ap markers from Jan to Aug 2016
We are looking at a 95% LTV mortgage what do you think our chances are?
Sara (Debt Camel) says
I can’t make a sensible guess about this. You need to go through a broker, some lenders will care more about the AP and late payments than others. You also need to be sure you will pass affordabilty checks, there is a link in the article above.
Amanda Ramsay says
Hi Sara,
Thank you so much for the reply, i have been worried sick about our application being declined. i had a default on my file but i had this removed as wasn’t acutely for me (for an energy suppler and was for a previous tenant)
I have check affordability calculators and all have come back fine
As i mentioned the AP on the mail order is settled and was settled back in 2016 and the card AP then got back on track albeit with 4 late payments
Do you think a mortgage is out the question with high street lender?
Ben says
Hi, I’ve got a mortgage through Natwest, have had it for 3 years in October. I’ve RECENTLY become self employed (4months) BUT with the same company I’ve been employed with for 16years.
We are looking at getting a bigger house, where do I stand mortgage wise with now being Self employed? I’ve got around 30k equity on my house which would go as a deposit on a 160k house hopefully.
Sara (Debt Camel) says
Most mortgage lender will want to see your accounts after 1,2 or even 3 years of being self-employed. if you need to move soon, this was a bad time to change your employment status…
Ben says
Not really a bad time, I’m on a lot more now. It’s a weird one as I’m counted as self employed, but my contract is 5 days a week so it’s not as if I’m looking for work as I’m guaranteed it.
Sara (Debt Camel) says
But your contract is presumably time limited? So it could end in 6 or 12 months?
Ben says
Not really. It’s for a delivery company.
Sara (Debt Camel) says
So from the point of view of a mortgage lender, in your previous job you could not easily be sacked and would have been entitled to redundancy pay, holiday pay, sick pay. Now you have a lot less job security. That is why lenders like to see a history of how your self employment is going before they offer a mortgage. Talk to NatWest and talk to a mortgage broker, I’m just saying you are likely to find this difficult.
Guppy says
Hi,
My partner has 2 defaults aged 04/2017 and 04/19 totaling less than £1000 and i have a default aged 05/18 totaling £500. these have been settled. we have 2 credit cards each totaling £2000 i have a loan which will be paid in full by October. my husband is on 22k and im now on 18k. We want to try a mortgage with help to buy. Is this possible?
Sara (Debt Camel) says
Well you haven’t said how large a mortgage you want. But if you pass the mortgage affordabilty tests, then After April next year, when the most recent default will be over 12 months old. then you should be able to find a lender. You will maximise the chance of this if you both stop using the credit cards and make consistently repayments that are more than the minimum each month.
Before then, you may struggle because of that recent default.
adam says
can you recommend a good broker?
Thanks
Sara (Debt Camel) says
See https://www.moneyadviceservice.org.uk/en/articles/choosing-a-mortgage-shop-around-or-get-advice