We are looking to apply for a mortgage in the next couple of months, we have had a difficult year due to much higher than usual outgoings and were behind with several credit cards but have resolved all these and my income hasn't changed throughout. We have 2 remaining issues,
We have a default for a credit card from September 2020 with MBNA for £14500, MBNA have been very understanding and promised they won't sell the debt on or take it to a CCJ etc and they are happy for us to pay it back at whatever level we can afford-how will this be viewed? Do all defaults have to be satisfied to be considered? The other issue is a Natwest loan which we had 1 missed payment then 2 Covid payment holidays then 6 months forbearance. We can now afford to start making our regular payments as normal but we are unsure how to deal with arrears, Natwest have said they can extend term of the loan but this will mean it goes down as an arrangement on the credit file, will this be allowed or will we have to pay the full arrears off immediately (£4500) which would have to come out our deposit? As mentioned in my previous posts we have a good deposit of around 30-35℅ of potential house value
Hi, thanks for getting in contact.
I would expect a mortgage to be possible despite the fairly recent nature of your credit issues due to the large deposit you have.
Generally speaking it would not make a significant difference whether the default(s) were satisfied or not so I wouldn't necessarily consider that to be a deal breaker.
The key thing may be what the deal/rate/monthly payment looks like as affordability will be key.
Thanks for your reply. We should have pretty good affordability I am agency/flexible worker but I have 5 years history of agency work and 1 year with my current agency/flexible contract and p60s and my income is very good and unaffected by Covid etc. Would you suggest that accepting a plan with Natwest to pay the loan off over an increased period is better to preserve our deposit (which would show as arrangement on credit file) or would it be better to use deposit to pay arrears off in full (we should still be able to preserve a 30% deposit hopefully) Is having anything marked as an arrangement a likely deal breaker?
This is very much lender specific however entering into an ongoing arrangement can be problematic.
The trouble is some lenders will view this as an ongoing problem as opposed to a default which could be seen as a historic issue given that there's a date stamp on it.
I thought this may be the case, I believe Natwest may force us into settling the arrears immediately as the only way of getting our credit file back on track which is frustrating as of they hadn't misinformed us regarding arrears/Covid payment holiday and the impact it would have on our credit file we would never have built up such a level of arrears.
I empathise as to a degree I expect the decision to be taken out of your hands.
That's not to say a mortgage isn't possible with an ongoing arrangement though, with your deposit you may still have options.