If you are in a couple and hoping to apply for a mortgage, then this can seem complicated if one of you has a bad credit record. The natural solution might be for just one partner to apply, but if you are married, then most lenders will insist that you make a joint application.
However, with the right advice, you may be able to find specialist lenders who are willing to consider your application, either singly or jointly. Here are some important points to bear in mind.
If your partner has an income, they won’t be able to contribute to the mortgage repayments if you take out the mortgage solely in your name, and you will have to meet them from your own income. This will lower the amount that you are able to borrow, compared to if you make a joint application.
Furthermore, the lender may even class your partner as a dependent, which will reduce the amount you are able to borrow further. If your partner is contributing to the deposit, but is not on the mortgage deeds, this may be viewed as problematic by mainstream lenders, because they will regard your partner’s share as gifted.
It is still possible to go ahead and find a specialist lender if you are keen for just one name to be on the mortgage. However, always seek the right advice or you are likely to end up with a string of rejected mortgage applications, which will weaken your case even further.
The next thing to think about is the reasons why your partner has bad credit, as some lenders have a more flexible approach than others to poor credit history. For example, they will look in more detail at how long ago the credit problems occurred, and how serious they were.
They will also consider if the issue was a one-off, or reoccurred on multiple occasions. Sometimes, an unexpected circumstance such as redundancy or a period of illness might be seen as a mitigating factor, especially if the credit record shows that since recovering from the adverse event, the person has been financially responsible.
The amount of debt involved will also be taken into consideration. For example, a couple of late credit card payments for a few hundred pounds will be less of an issue than thousands of pounds of debt or worse.
The nature of the credit issue will also be a consideration—bankruptcies, repossessions, or Individual Voluntary Agreements (IVAs) are regarded as more severe problems than late payments, arrears, or defaults.
If the debt involved has been repaid in full, and no more credit problems have occurred since, then this will put the application in a more favourable light. Remember that a lender will only be able to see the last six years of a credit report, so historic issues shouldn’t be an obstacle to a mortgage deal.
So, it’s certainly not an impossible situation, but it is one which requires some expert guidance from a professional broker to understand exactly what your options are. To discuss mortgages with defaults, please get in touch today.Your home may be repossessed if you do not keep up with your mortgage repayments
There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. There may be a fee for mortgage advice. The actual amount you pay will depend on your circumstances. The fee is up to 1% but a typical fee is £595.
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