Applying for a Mortgage Yourself When Spouse Has Bad Credit
You may be surprised to know that having a spouse with bad credit doesn’t mean you can’t get a mortgage in a single name. Here’s what you need to know.
Can your long-term Partner’s credit performance affect your chances of getting a mortgage?
I often take enquiries from potential customers who are looking to take out a mortgage in a single name because their long term partner, husband or wife has had credit issues.
First of all I think it’s relevant to lay out what could be seen as poor credit by Mortgage Lenders its missed payments on unsecured debts such as mail order, mobile phone contracts, utility bills, credit cards, store cards etc. In unapproved overdraft facilities and bounced direct debits. There are also more heavy demerits such as Defaults, County Court Judgments (CCJs) and repossessions. Approaches to tackling credit issues are also flagged such as arrangements to pay, debt management, Individual Voluntary Arrangements (IVAs) and Bankruptcy.
A person’s financial history affects their financial future. When applying for a large loan, like a mortgage, signs of adverse credit make an individual riskier and give Mortgage Lenders a reason to decline the application. Most Mortgage Lenders run an “internal credit score” which cross references credit agencies and factors in credit issues; the brain-child of the system is to screen-out unwanted cases early in the process using a computer rather than have the expense of an Underwriter to look at them.
So where do you start, and what can be done?
First of all, you need to make sure your Partner’s credit has not impacted your own credit record. I personally like Checkmyfile , click here as it looks at all the main Credit Agencies the Mortgage Lenders tend to use. The Mortgage Lenders will also check the same source to see if you have any “financial ties” to your Partner i.e. you are on any finance together, and if you are linked your mortgage choice is likely to be severely restricted.
Affordability
Mortgages are typically limited to 4 to 5 times your annual income you are going to be on a decent salary to buy a home on your own.
Is there a tolerance for certain credit problems?
Yes, absolutely there is a spectrum of Mortgage Lenders who have their own different acceptance levels. To put this perspective, I currently have access to over 80 lenders in England and Wales (as at 28/1/2023). As a guide, the worse the problems, the higher the interest rate and deposit requirements.
- So where do you start, and what can be done?
First of all, you need to make sure your Partner’s credit has not impacted your own credit record. I personally like Checkmyfile , click here as it looks at all the main Credit Agencies the Mortgage Lenders tend to use. The Mortgage Lenders will also check the same source to see if you have any “financial ties” to your Partner i.e. you are on any finance together and if you are linked your mortgage choice is likely to be severely restricted.
- Affordability
Mortgages are typically limited to 4 to 5 times your annual income you are going to be on a decent salary to buy a home on your own.
- Is there a tolerance for certain credit problems?
Yes, absolutely there is a spectrum of Mortgage Lenders who have their own different acceptance levels. To put this perspective, I currently have access to over 80 lenders in England and Wales (as at 28/1/2023). As a guide, the worse the problems, the higher the interest rate and deposit requirements.
Frequently asked questions on applying for a mortgage in a single name due to poor credit
A) No, once the household income will undoubtedly improve your ability to service the debt it cannot be used for mortgage purposes.
A) Potentially, your joint financial commitments will be looked at, and if connected, you are likely to have only a few options.
A) Most do but not all of them.
A) There are clear ones, such as husband and wife. Outside of this, the strength of the bond can be determined by shared addresses, bills and finance together. Children also link you. Furthermore, any over an adult who will regularly reside in the property must be declared on the mortgage application.
A) This is unlikely to be a successful course of action as it will stimulate questions from Mortgage Lenders as to why they are not going to be a party to the mortgage and bring their credit issues into the assessment.
A) No, but as a generalisation, the ones that want to write volume and are household names do, such as Barclays, HSBC, Halifax, Nationwide, NatWest, Santander etc. There are some Regional Building Societies that prefer to use solely Underwriters and the same for Poor Credit Specialist Lenders.
A) Not directly, but it gives you an idea. Normally the higher the score, the better. However, the Mortgage Lenders will have either their own credit scoring system or their own rules embedded in an “off-the-shelf” solution.
A) It is normally one or more of the following Equifax, Experian, TransUnion and Crediva. The acting Solicitor for the mortgage will also run a bankruptcy search. Your professional Mortgage Broker should be able to give a greater insight on the relevant one for each Mortgage Lender
A) A mortgage is an expensive and long term commitment. If there are doubts that you will be able to maintain the payments for any reason, including concerns over the impact of your Partner’s credit issues on you, then I would say “no”. The fact the interest rate might be better becomes irrelevant.
A) You should seek professional advice from a Mortgage Broker, such as Niche Advice, as it’s easy to run into irreversible problems. Simply click on the below button and complete our short enquiry form, and we will be in touch to give you the appropriate Mortgage advice.
