Refused a Mortgage cos of missed credit card payments

A

Ali B

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Hi, we have been refused mortgage approval with your main banks cos of missed credit card payments. We have been approved by GE Money though but with an interest rate of 7.2%. I know this is high but we have been advised that we will be able to switch after one yr to one of the main banks.
Does anyone know if there would be any claus to say that we cant switch after the year is up?
 
i strongly advise against a mortgage with ge money. i have recently sold a house after getting a mortgage with them . long story short , we borrowed 180k ,paid mortgage for 8 month asked for a settlement figure when we sold house settlement was 185000, more than we originally borrowed , they deducted nothing of what we had paid , even though we werenot on an interest only mortgage
 
Thats crazy!! Did you ask them where the extra 5k came from?
That really sounds strange.
 
I would second that about avoiding GE Money

I don't know how much you are looking for- but have you tried your local council for a mortgage? Or the Affordable Housing they offer?

I would strongly advise this in your situation- avoid getting trapped by a big bank that's guaranteed to rip you off! They have placed you in a sub prime high risk category

Pm if you want
 
Council is not an option as its not our first property and besides I know so many people waiting a long time for the affordable housing.
 
avoid those sub primers with a large bargepole! seriously bad news. I would wait a year or two to see if your credit rating improves a bit. I really wouldnt risk it if I was you.
 
How many of the high street lenders did you try and how bad was the issue with the credit card payments?
 
If it is not your first property (and presumably you are not finalising a family law matter, such as separation - or otherwise), then go ahead and take the high rate GE Option- you obviously don't need to move in a hurry- so whay not sort out your finances re. credit cards etc and come back to the market looking for mortgage with a good track record.

I hope you don't think i am being cruel- i don't have all the facts- but based on the snippets, that's my advice.
 

Wicklowlass

It is very easy to get to the bottom of this. Ask for a statement. You should see the interest being added every month. You can check that it is approximately correct. You can check that you have received full credit for the repayments you made.

8 months' repayments would make very little dent on the capital outstanding. But then again, it should not result in the capital rising.

If you don't understand the figures or if they can't explain them, then make a formal complaint to the Ombudsman.

There is a role in the market for sub-prime lenders. It is not good advice to dismiss one of them or all of them, because someone doesn't understand the account they had with them.

Brendan
 


Thanks for the advice, every little helps!!
We are clearing the cards off completly but we have been told that the credit bureau report stays for 5 yrs. Its only a yr if we do go with ge money and hopefully one of the high street banks will be willing to take us on then.
 
LDFerguson said:
How many of the high street lenders did you try and how bad was the issue with the credit card payments?
Click to expand...


Hi LDFerguson, we have tried about 5 of the high street ones and all have came back cos of the credit cards. To be honest we didnt realise the importance of missing a months payment here and there as it was only small amount of about €40 - €50 per month. We were told it was about
3 payments last yr but it could of been up to 5!
 
If you are running with the GE option - be absolutely sure that each repayment is made on time!! These "sub-prime" lenders should be used for credit repair and falling down on payments again will mean it will be years before the mainstream banks will take you on board again.

Also, it is a minimum of 12months before you can move back. In most circumstances it will be 18months + before clients move back...

J
 
Wicklowglass there was probably a penalty for redeeming your mortgage early. When you got your redemption figures you should have asked what the figures were made up of. If you had been with an mainstreet bank and redeemed a fixed rate mortgage early you would have been hit with 6 months interest so you could in fact pay back more than your borrowed if it was at the beginning of a mortgage. It's not GE's fault that you had to pay back more, you should have read the terms and conditions.

OP there is nothing wrong with going with a subprime lender if that is a) what you can afford and b) the only one that will give you a mortgage. After all subprime lenders are there for those of us who cannot get a loan from the mainstream banks. Make sure you are not tied in so that you can switch within a year and be aware of any penalties for switching. I'd also advise cutting up your credit cards as you are not managing them very well. Someone who thinks it's ok to not pay their credit cards should really be sure of what they are getting into by getting a mortgage.
 

Hi Ali,
Can you please please step back and do an evaluation of this strategy. as another poster said, there is no guarantee that a mainstream institution will take you back after 12 months, and in the meantime you could be putting yourself under tremendous pressure. I don't know what your budget is, but a 7.2% mortgage rate even on interest only is a lot - it's about double the rental yield in most parts of the country.
To illustrate this point, look at the first twelve months with a property worth, say 500K. Interest only at around 7.2%, this will cost you approx 3k per month. As a generalisation, you would probably be able to rent a comparable property for 1500, without the inherent hassles of ownership (remember owning a property brings with it maintenance and furnishing costs etc).

Now looking at your situation I cannot for the life of me understand why you would want to take on such an extra burden just for the dubious pleasure of owning the house you are living in, when you can rent in comfort while you count down to the time when your credit record is clear. At the very least, you can prove your ability to pay the higher figure by putting aside the difference while you rent. This will be of comfort to you as you plan your budget but also to the lending institution.

So my advice, rent for a year, set aside the difference on a monthly basis, and review in 12 month's time.
 
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