Adverse Credit. Cheers Mate!

‘Mates Mortgages’ are becoming more popular as more and more first time buyers are attempting to bridge the impossible gap between their income and the payments on a new mortgage.

Britannia, HSBC and Skipton all allow for up to four people to be part of the same mortgage.
This all sounds very cosy. However, you best make sure you know the credit history of each of your mates.

Adverse credit history can effect all that are party to the mortgage even if adverse credit has effected just one party member.

Adverse credit is normally found on one’s credit history file. Adverse credit can be located at an address and will normally provide the name of the account that has been effected with adverse credit.
This can have a serious knock on effect for innocent parties who are tied in with the mortgage agreement.

As with all couples who enter into a mortgage offer, they are severally liable for the payments and maintenance of the mortgage. If one party does not pay the mortgage or their contribution, the lender will simply look to the other party to make sure the payment is made. Irrespective of any domestic matters you may have.

Equally, if one party of four decides to default on their agreement, the lender will still chase the remaining party members for the mortgage payment.

On the face of it, this ‘mates mortgage’ arrangement seems a good solution if your looking to get on the ladder. However, adverse credit can be lurking to the power of four. Four times the risk. Four times the chance to pick up some adverse credit. You really need to make sure that adverse credit is not part of your mates credentials.

As mentioned there is a knock on effect for the innocent parties. Adverse credit history remains on ones file for a period of six years. So even if you are no longer a part of the mates mortgage, the account number showing the mortgage details including your name will tell all.

So be careful. Adverse credit is four times more likely to happen with a ‘mates mortgage’.