Will record scupper my mortgage?

By THIS IS MONEY
Updated:

 

I am currently in the process of separating from my husband, who has a very bad credit history and I have just found out he is several months behind with our mortgage payments. I shall need a mortgage although this will be a joint mortgage with someone who has a good credit rating. Do you think I will be penalised and if so do you have any suggestions on how to approach this problem? L, Bicester.

David Hollingworth of mortgage brokers London & Country says: Unfortunately, the fact that you have arrears on the joint mortgage will show up on a credit search and will therefore seriously affect a new mortgage application. Click Here for This Is Money's guide to checking your record. To make things ever easier, we have letter template which you can fill in and send to Equifax or Experian requesting your details.

In tackling the current position the first thing you must do is talk to your existing lender. You need to explain your situation and that you were unaware of the mortgage arrears that have accrued.

It is important that you resolve the arrears issue so you know where you stand before looking to take on a new mortgage.

The most likely route is the eventual sale of the current property. You need to consult a solicitor about the terms of the separation and agree a course of action - the existing lender needs to be kept informed of progress.

Once you are in a position to look at a mortgage with your new partner you will need to declare that you have had mortgage arrears to your new lender and also explain to them how these arose. Lenders are willing to listen but some are more flexible than others so shop around. However, they may well charge higher rates of interest when there is a history of impaired credit.

Alternatively, your new partner could take out the mortgage in his name alone if he has sufficient income to support the size of loan required. The mortgage could then be transferred into joint names at a later stage once a sufficient period has elapsed with no further incidence of bad debt. This will mean that you will be able to take advantage of the more competitive rates currently available for residential mortgages.

If you do need to obtain the mortgage on a joint income basis, there are a number of lenders like Chelsea and Bristol & West who will provide mortgages where there is a history of impaired credit. They will then move customers on to more preferential rates once there is a track record of regular mortgage payments.

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