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Mortgage with Default

Last post Tue, Jan 07 2014, 11:37 PM by Zeb. 4 replies.
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  •  Tue, Jan 07 2014, 11:37 PM

    Re: Mortgage with Default

    I have to agree with MortgageBrokerSurrey.

    Unless you are willing to accept a mortgage product with inflated interest rates and fees then I do not think you will find a lender willing to help you here.

    You have not mentioned how much of a loan you are looing to borrow on the property; whether you have a 5%, 10%, 25% or higher deposit and this will be absolutely key to any application you may put forward.

    Its an absolute must that you pay off the defaulted balance....without it you are dead in the water or face a 10%+ interest rate (payday mortgages).

    If you do satisfy the default I still think its unlikely that you would be considered yet by any mainstream lender as you still managed to gain 2 defaults in the last 4 years....and these defaults will be visible to lenders until they have passed the 6 year anniversary from when they were added...not when the debt was accrued.

    If you want to increase your chances of acceptance then you cannot approach the lenders with a small deposit, you are not going to be considered with anything less than a 20% or higher deposit. You have too much negative credit profile and until that can be shown to be more positive then the lenders will only look at the defaults and nothing else.

    Ignore the credit score....its ***!!. CRA's (Credit reference Agency's have been slammed recently in the press for deliberately showing credit profiles with a more positive sheen than they deserve and your case is a typical example. With 2 defaults and one of them not satisfied or any attempt to pay made how can this show you as a good credit risk?....and yet your score is showing as 916.....I would almost bet money that you would be turned down for a loan, credit card or any mortgage you tried to apply for right now.

    The only suitable purpose that credit reports serve at present is to ignore the score totally and look at the information that is contained in the report....if it gives happy reading then apply away, if you have any reason to be concerned...don't waste your time and focus on mending the problems...such as paying the default off.

    Without trying to be so cruel, my best advice is to give up on the house for 12 months, pay off the default, and save as much money as you can possibly afford and then in `12 months try and approach the lender with a satisfied credit profile, 2 defaults that have around 12 months till they fall off and a decent (hopefully 20%+) deposit and I think you might find the lenders more accommodating....but do yourself a favour, try 1 broker for 1 application and if it fails...give up.

    • Post Points: 5
  •  Tue, Jan 07 2014, 5:48 PM

    Re: Mortgage with Default

    Lenders will use the date the default is satisfied.

    Your score of 916 should be good enough I wouldn't worry about improving this for now. Just worry about the defaults. No one will consider until you've satisfied the default.

    The notice of correction means when you come to do a Decision in Principle it will automatically go to 'refer' to underwriting who will manually look at your credit report. If the default is not satisfied I doubt a lender will consider as its technically still in dispute.

    Before clearing the default I would get a broker you feel comfortable using to have a look at your credit report and see if its worth doing or to keep disputing.

    • Post Points: 20
  •  Tue, Jan 07 2014, 5:30 PM

    Re: Mortgage with Default

    Thanks,

    both accounts went into default in the middle of 2010 so both have been well over 36 months. will this make a difference with both of them or just the one that is satisfied??

    My credit score with experian at the moment is 916, so im assuming that given more time and satisfying the other default (which i grudge doing as i dont owe it) the score will improve more??

    Also i have a notice of correction on the un satisfied default, will this make a difference?

    Thanks
    • Post Points: 20
  •  Tue, Jan 07 2014, 5:16 PM

    Re: Mortgage with Default

    Most lenders allow only one satisfied default in the last 36 months and some none in the last 12 months.

    If you were to satisfy your outstanding default there would only be a handful of lenders willing to consider your application. It will depend on your overall credit score and loan details (for example if you wanted to borrow at 30% LTV it would be more likely accepted than a 90% LTV)

    Your best bet is speaking with an independent broker with your credit report to hand, as I see it you would possibly have 5 lenders to choose from.

    • Post Points: 20
  •  Tue, Jan 07 2014, 1:01 PM

    Mortgage with Default

    Hi There,

    Looking for some help in regard to getting a mortgage. I currently have a credit score of 916, which i would class to be quite good. but the problem i have is that i have 2 defaults on my accounts from debts that i did not know about.

    1 default was for £35 from an old contract phone which i had no idea i owed. once i found out about it i paid it straight away, but they will not remove the default from my credit file. They just tell me it is fine because it now shows as default satisfied....

    the other default is again from an old contract phone and is for £414, which i now have a DCA (Lowell) hounding me to pay, i have been disputing this debt for nearly 3 years now as it is incorrect and they will not remove this default from my credit file.

    The main problem is that i am about to apply for a mortgage but i am afraid i will be rejected because of both the satisfied default and the unsatisfied default.

    If i was to settle the outstanding default so i had to defaults that were satisfied on my credit file would this help me to be accepted with a credit score of 916... which i am assuming will go up if i settle the default?

    Many Thanks
    • Post Points: 20