Accounting for partners income on mortgage

[RichT81]

Hi,

My partner and I recently applied for a joint mortgage at Nationwide and were rejected at the final stage as she has bad credit (default/CCJ from a while back). Her income is approximately a quater of mine so her contribution to the amount we can borrow is minimal but required. I have a clean credit history and have been told by several friends that I can solely apply for a mortage but take into account her income. Has anyone any advice/experience with this?

Thanks,
Richard

[Miss Zippy]

I�ve not heard of this and I can�t imagine that a mainstream lender would be prepared to lend a sole borrower more than their earnings would make them eligible to borrow. After all, if you take out a mortgage in your sole name and you default, the lender can only pursue you and not your partner and a lender is not going to take that risk. Have you tried approaching lenders in the �sub-prime� market: these are lenders who specialise in offering mortgages/loans to people with a poor credit history. The main downside of these sub-prime products is that the interest rates are higher.

[RichT81]

I agree with you Miss Zippy and suspect these friends are referring to guarantor mortgages which I can't see working in my scenario (I can't be both a guarantor and applicant and I can't think of a third party that could be a guarantor). It just grieves me that I get pidgeonholed as 'sub-prime' when I'm far from it and in fact the poor-credit rating only really applies to <�30k of a �155k mortgage. I guess I'm hoping for some revelation that there is a company out there that would account for this and offer me a 'partially sub-prime' mortgage with a slightly higher interest rate rather than the 7-11% APR I've seen so far. In the mean time I guess chatting to an independent broker may enlighten me.

Thanks again for backing up my suspicions Miss Zippy,
Richard

[EverClean]

This is not a guarantor mortgage and sopunds very much to me like a self-certification mortgage. You will be self-certifying that the income is yours when it actually isn't. It is reasonably common but is also fraud. Go to a mortgage broker and get the market checked out. Adverse credit mortgage rates have plummeted over the last year or so and you should be able to get a decent rate, especially if the CCJ or default was more than a year ago.

[RichT81]

I have read about self-certification mortgages, EverClean, but discounted them as they're aimed at self-employed or irregular earners, neither of which I am. I see people are abusing them somewhat though which is not something I'm interested in.

I've arranged a meeting with a broker who seemed pretty confident so my fingers are crossed.

Thanks for your advice,
Richard

[Miss Zippy]

Did your partner pay her debt? If she did, it should be noted on her credit records (request copies from Equifax and Experian) that the debt was satisfied. Some mainstream lenders will lend to people with CCJs if the debt was satisfied. Notwithstanding this, using a broker or preferably an independent financial adviser is a wise route for you to take as he or she will have expert knowledge on the market and can get the best deal for you. If you do end up having to take out a higher rate 'sub-prime' mortgage, make sure you are not tied in for too long so that you can re-mortgage to a mainstream lender once your partner's credit history is restored (six years from the date of the CCJ, assuming no other adverse circumstances arise to affect her credit rating).

[RichT81]

No, she still has some debt to pay off and will do for a while yet. One interesting thing the broker mentioned on the phone was that as a professional I may be able to cover the mortgage myself. This is something I hadn't even considered. I'd certainly prefer to go down that route if possible, guess I'll find out at the meeting.

Thanks again,
Richard

[Miss Zippy]

Yes, some lenders are willing to lend more to those in the early stages of a �professional� career, eg, trainee accountants, lawyers, actuaries etc, on the basis that their income is likely to considerably increase over the coming years once they qualify. Sounds like your broker is one the ball so I expect you can avoid the sub prime route.

[Mrs_Pegasus]

My experience of self-certified mortgages is because the borrower has 25% of the purchase price to put down as a deposit. Normally, the borrower will be asked to pay an indemnity insurance which covers the lender for 75% of the value of the house if it is repossessed. Therefore, you could self certify legally if you have that amount of deposit.

Have you shopped around for a mortgage? Which credit report agency has the debt showing? Different lenders use different agencies and I know that my ex partner had a default on his record but the lender used another agency and therefore it never showed on the search.

[RichT81]

Unfortunately I don't have that kind of deposit available to me at the present moment in time. I suspect if I did I'd have been able to cover the original mortgage from Nationwide myself. We're still waiting for my partners Experian report (they do security checks through the post) but her online Equifax report showed enough damage (Nationwide state they use these two, I don't know whether that means both are screened). I have a meeting with a broker next week who'll hopefully do the shopping round for me, either finding a lender that uses different credit check heuristics, a good sub-prime deal or the full mortgage in just my name.

[EverClean]

You are self-certifying your income - actually stating that you earn a certain amount. You are not covering the lender for their risk. Inflating your income for a mortgage application is fraudulent and should not be encouraged. A lender has a responsibility to ensure that their client can afford the mortgage given their circumstances.