Is the mortgage market turbulence getting you down? Have you got a mortgage-related question you need answering? Email in, and we will get one of our experts to reply. Nick Mendes, mortgage technical manager at John Charcol, has given his advice to a reader below. If you have a question for our experts, email us at money@theipaper.com.
Question: My partner and I had an offer accepted on a new house and were partway through selling our own when the mortgage came unstuck. Two lenders turned us down. One flagged a financial association with my ex-husband, who was made bankrupt without my knowledge, from a joint account we closed years ago. The other declined me over some modest betting transactions on my bank statements, even though I have never missed a payment or gone overdrawn. We now have a buyer and a purchase lined up and are worried the whole chain could collapse. What is a financial association, how do I get rid of it, and is gambling on a statement enough to sink an application when nothing else is wrong?
Answer: I am sorry you have hit this so late in the process, with a chain already depending on it, but neither problem is unusual and there is a clear route through both.
Take the financial association first. Whenever you open a joint account, or in some cases a joint mortgage or loan, the credit reference agencies, Experian, Equifax and TransUnion, link your credit file to whoever you held that account with.
That link stays on file indefinitely, long after the account closes and long after you have stopped living together. It means anything that happens on your ex-partner’s file afterwards, including bankruptcy, can show up as a warning sign when a lender checks yours, even though it has nothing to do with how you manage your own money.
It is one of the more misunderstood corners of credit reporting, and I see it catch out separated couples and former housemates regularly.
The fix is straightforward, even if it is not widely advertised. You can write to each credit reference agency and ask for a “notice of disassociation” to be added to your file.
You will usually need to show the account is closed and that there is no ongoing financial link, a bank statement showing the closure date is often enough. This tells any future lender that although a financial link exists on record, you no longer have any financial connection to that person, and their credit conduct should not be held against you.
It typically takes two to four weeks to process, so it is worth doing as soon as you suspect it might be an issue rather than waiting until you are partway through an application.
Once it is in place, most mainstream lenders will look past the historic link, though it is worth checking with your broker that the lender you approach reviews these notices before it submits the application, as a handful still do not.
The gambling transactions are a different sort of problem, and one that catches a lot of otherwise strong borrowers out.
Lenders no longer rely on your credit score alone. Under responsible lending and Consumer Duty rules, underwriters routinely go through three to six months of bank statements looking at spending patterns, not just for missed payments or an overdraft, but for anything they consider a sign of financial instability.
Regular betting transactions, even small and well managed ones with no obvious harm attached, can be treated as a red flag regardless of your overall conduct.
Some lenders decline outright as a matter of policy, some will ask for an explanation and a few months of evidence that it has stopped, and a smaller number are genuinely far more relaxed about it and will lend without hesitation.
This varies a great deal between lenders, which is exactly where a good broker earns their fee, steering you towards those whose policy fits your circumstances rather than sending applications out and collecting further declines, which can itself start to dent your credit file through repeated hard searches.
My practical advice is this. Submit the notice of disassociation now, it costs nothing and permanently removes one obstacle regardless of what happens with the other issue.
On the gambling point, if you can, stop those transactions completely for a few months before you reapply. Lenders want to see a settled, consistent pattern rather than a sudden change made purely to look better on paper.
When you do go again, use a broker who can check lender policy in advance rather than after a decline, since each hard search and refusal can do more damage to your file than the original issue ever did.
Given you already have a buyer and a purchase lined up, finding the right lender first time will matter far more than moving quickly, and a short delay now is far better than losing the chain over an avoidable second decline.
