Will my credit history deter mortgage lenders?

Q I am 40 years old and in secure NHS employment. I have been a housing association tenant in London for many years and am now looking to move out of the capital, but remain in reasonable travelling distance to work. Shared ownership seems to be the best option for me and I am in the final stages of saving the required amount.

However, around three years ago I had a default registered against me by a credit card company following a redundancy, with accepted reduced payments not registered on my account. Because of this, I am concerned that I will not be able to find a mortgage at a rate acceptable to shared ownership mortgage companies, if at all. The account was settled with the company soon after default and since then I have a perfect credit record.

I am in the process of having a notice of correction placed on the account. Will this make matters worse?

I would appreciate your advice and recommendations before credit checks.
TP

A To answer your last question first, no, putting a notice of correction on your credit file won't make matters worse. A notice of correction helps to clarify your situation for any lender looking at your credit file. And if it shows that you weren't in fact in default, it can only help to improve your position.

Interestingly, even if you did have a real default in your credit history, it doesn't have to stop you getting a mortgage. Leeds Building Society, for example, has just launched a credit-impaired mortgage specifically for shared ownership borrowers.

It will not only look at shared ownership customers who have defaults, past mortgage, rent arrears or county court judgements against them, but will also lend 100% of their share of the property with no higher lending fee.

But the interest rate is a high 6.7% and given that you don't appear to need a credit-impaired mortgage, you would be better off approaching lenders who offer standard deals to shared ownership borrowers.

These include high-street names such as Abbey, Britannia, Barclays and Nationwide, as well as the less well-known building societies such as Cheshire, Ipswich, Kent Reliance, Newbury, Portman and Saffron Walden, which, like Britannia and Leeds, is prepared to grant 100% mortgages. However, some building societies may not lend outside their local area.