Welcome to the trust deed forum milngavie1978.

We have heard some noises from mortgage brokerages that there may be lenders that would consider a case during a trust deed if there is at least a 30% deposit. The rates are loaded as you might expect.

If you do intend to proceed you need to be careful not to be seen to acquire an asset. I wouldn't go ahead without clarifying the situation and any possible ramifications with your trustee in advance.

Hi,

Thank you for your reply.

I will have a £30k deposit so im hoping that would go some may to helping with getting a mortgage. I got my trust deed through Phillip Gills so i will give them a call nearer the time to so i know where i stand.

I have also been looking through the forum and it seems that paying a trust deed off early can be an option? Is this correct or is every trust deed individual so circumstances differ?

Regards
S.Greig

It is a good idea to talk it through with them.

If a third party can introduce a lump sum you may be able to negotiate an early end to your trust deed. It also sometimes happens when someone in a trust deed themselves comes into a sum of money so large they can pay off off their full debts, interest on the debts, and the trust deed fees.

If you apply for a mortgage with your partner you will be linking yourself financially(from a credit report point of view),which may have an adverse impact on your partners credit rating.

If you have access to a lump sum to offer to end your TD early I would be looking to do that,and Phillip Gills should be able to direct you to a figure which would be acceptable(expect it to be close to what you were expected to pay in the remaining months of the trust deed).

The trust deed stays on your credit files for 6 years from the start so I would be tempted to avoid any links with your partner,unless credit ratings dont matter.

Paul

Thanks for your help. I was unaware my bad credit rating could be passed on to my partner if we tried for a joint mortgage.

My plan was when i have the money, pay off the trust deed early. Then start looking for a house. I was hoping because of the large deposit we would have to put down it would help with getting a mortgage. Our other option would be to continue renting as we are now but I feel thats just throwing money down the drain.

Best option i think would be, speak to Phillip Gill and a mortgage advisor and see where we would stand after that.

Fingers crossed there is some light at the end of this tunnel 🙂

There is light there for sure,just think back to how you felt prior to signing the trust deed.

Regarding your credit file,any connection with another person while the trust deed(and any associated defaults) is on your record could affect them,certainly if you took on a joint mortgage that would show a clear financial link to any lenders and if your file still had the trust deed on it,those lenders may see the 2 of you as a risk not worth taking.

If you have the ability to pay off the trust deed early,I would do so. Then make sure you find a whole of market broker to discuss mortgage options and be upfront about your credit history,some mortgage companies ask if you have ever been made bankrupt or entered into an agreement with your creditors,and a broker will know which companies to avoid.

Could your partner take out the mortgage on their own merits and have you added later on when your credit file is free of the trust deed?

Paul

So the connection to my bad credit rating being attributed to my partner would only happen if i was going for a mortgage while still in the trust deed? Or would be attributed to her even after im out the trust deed?

Before I thought about buying a house I was definitely either going to clear the trust deed or wait till it had run its course.

With just my girlfriend applying for a mortgage we would be severely limited to the property we could buy as her income would only be around £30k per year but would be more than double that if it were to apply for a joint mortgage.

I would rather try as a joint mortgage but thinking my credit score may hinder us. I was hoping the high deposit might help with our application but id still have a poor credit score so not sure how that would work.

When my trust deed was showing on my files as active my credit score was 308/1000,as soon as it showed up as no longer active my score jumped to 447/1000. Thats still not a good score but I didnt expect it to be. Any joint applications within those 6 years would flag up your trust deed to potential lenders,whether or not it would prevent lending is a different matter.Lenders are a strange breed and have their own rules.

For the 6 years after signing the trust deed it will show up on your credit reports,regardless of whether you pay it off early or not,so applying jointly with your parnter in those 6 years would more than likely hinder your chances of a successful mainstream lender loaning to you. Thats not to say a broker couldnt find you the loan you would need,especially if you have a significant deposit and are willing to pay a higher rate for a few years before mainstream lending becomes available to you.

Can I ask where the deposit is coming from,its not something that creditors would be expecting a share of(windfall or bonus from work etc)??

The source of these funds is important, please let us know when you can.

The funds are an early inheritance my partner will be receiving from her mum to help her/us get on the property ladder.

Good,the fact it is from your partners mum for her means its not yours and cannot be touched by creditors!!

Is your partner ok in using this money(or part of it at least),to end the trust deed early?

Paul

Yeah, that wouldn't be a problem. Its already been discussed and that's definitely the option. It would be on a loan basis as it was my debt so wouldn't be fair for her to pay.

If it helps us get our house quicker then she is all for paying it off early and trying to start a fresh.

What a nice person you sound milngavie 1978! I think your partners Mum is pretty cool too! It's nice to see someone prepared to stick their neck out and look past the debt stigma!
As plasticdaft says, just remember pre-trust deed and look forward now and yes, there will be light at the end of the tunnel...and remember it's only a tunnel not a black hole!!
Good Luck people!

Definitely see a broker. Nothing is what would have previously been expected in mortgage terms. Although it may be a negative to link your credit by applying jointly, this may be outweighed by the affordability (higher income to loan ratio)and the reduced LTV. What has become very clear to me in the last couple of years is that logic does not attach itself to many lending decisions now.

There is likely to be a product available, possibly with unattractive terms, you won't know till you enquire. Perhaps a fixed rate of, say 7% is your preference over renting for a further period. It will be an individual (joint) decision in the end.

I don't think I can name/suggest a broker on the forum but go with recommendations anyway versus yellow pages.

Also, the joint application used to be assumed to be favoured because of stability/respectability etc but , in my view, that was not the reasoning. Rather, the ability to lend a greater amount but have 2 separate individuals able to be pursued in a default scenario gives the lender greater security.