If you have a Trust Deed, you may be wondering whether you can still get a mortgage. The short answer is yes, but it can be more challenging than if you didn’t have a Trust Deed.

A Trust Deed is a legally binding agreement between you and your creditors to pay back your debts over a set period of time. It’s a form of insolvency that can help you become debt-free, but it can also have an impact on your credit score and your ability to borrow money.

When it comes to getting a mortgage, having a Trust Deed on your credit file can make it more difficult to find a lender who will approve your application. However, there are specialist mortgage brokers who can help you find a lender who is willing to consider your application. They can also advise you on how to improve your chances of being approved, such as by saving a larger deposit or improving your credit score.

Understanding Trust Deeds and Mortgages

Definition of Trust Deed

A Trust Deed is a legally binding agreement between you and your creditors to pay off your unsecured debts over a set period of time, usually 4 years. It is a form of insolvency solution available in Scotland, and it is a way to avoid bankruptcy. The Trust Deed is set up by an insolvency practitioner who acts as the trustee and manages your finances during the period of the Trust Deed.

Definition of Mortgage

A mortgage is a legal agreement between you and a lender to borrow money to buy a property. The lender provides the money, and you pay it back over a set period of time, usually 25 to 30 years. The property is used as security for the loan, and if you fail to make the repayments, the lender can repossess the property.

Link Between Trust Deed and Mortgage

If you have a Trust Deed, it can affect your ability to get a mortgage. Most mortgage lenders will consider you a high-risk borrower if you have a Trust Deed or have had one in the past. This is because a Trust Deed is a form of insolvency, and it shows that you have had financial difficulties in the past.

However, it is still possible to get a mortgage if you have a Trust Deed. You will need to find a lender who is willing to lend to you, and you may need to pay a higher interest rate. You will also need to have a deposit, which is usually around 5% to 10% of the property value.

It is important to note that having a Trust Deed on your credit file can affect your credit rating. This can make it harder to get a mortgage or any other form of credit in the future. However, if you make your monthly payments on time and complete the Trust Deed successfully, it will be marked as “satisfied” on your credit file. This can help to rebuild your credit rating and make it easier to get new credit in the future.

Overall, if you have a Trust Deed and are looking to get a mortgage, it is important to speak to a mortgage broker or a solicitor who can advise you on your options. They can help you find a lender who is willing to lend to you and guide you through the process of getting a mortgage.

Eligibility for Mortgage with a Trust Deed

If you have a Trust Deed, you may wonder if you can still get a mortgage. The good news is that it is possible, but you need to meet certain criteria.

Criteria for Eligibility

To be eligible for a mortgage with a Trust Deed, you need to meet the following criteria:

• You must have completed your Trust Deed and have a discharge certificate.

• You must have a deposit of at least 5% of the property value.

• You must have a stable income and be able to afford the mortgage repayments.

• You must have a good credit score.

Impact on Credit Score

Having a Trust Deed can have a negative impact on your credit score, as it will stay on your credit report for six years. However, it is still possible to get a mortgage if you have a poor credit history.

If you are looking to rebuild your credit rating, you can take steps such as paying your bills on time, avoiding new credit, and using credit builder products.

Role of Mortgage Brokers

If you have a Trust Deed, it can be beneficial to work with a mortgage broker. They can help you find lenders who are willing to lend to people with poor credit histories.

Mortgage brokers can also help you understand the impact of your Trust Deed on your mortgage application and provide guidance on how to improve your chances of being approved.

Overall, if you have a Trust Deed, it is still possible to get a mortgage. However, you need to meet certain criteria and may need to work with a mortgage broker to find a lender who is willing to lend to you.

Process and Legalities

If you have a Trust Deed, getting a mortgage can be a complicated process. However, with the right knowledge and guidance, you can still secure a mortgage on a property. In this section, we will discuss the legalities and processes involved in getting a mortgage with a Trust Deed.

Transfer of Property

When you have a Trust Deed, the property is not owned by you but by the Trustee. Therefore, you need to transfer the ownership of the property to yourself before you can apply for a mortgage. This process involves the conveyancer and the Land Registry. The conveyancer will prepare the legal documents required for the transfer of ownership, and the Land Registry will register the transfer.

Declaration of Trust

After the transfer of ownership, you need to create a Declaration of Trust. This legal agreement outlines the ownership of the property and the shares each owner holds. If you are a joint owner, you can choose to be joint tenants or tenants in common. Joint tenants mean that if one owner dies, the property automatically passes to the surviving owner. Tenants in common mean that each owner’s share can be passed on to their beneficiaries.

Joint Ownership

If you are a joint owner, you can apply for a joint mortgage. This means that all owners are responsible for the mortgage repayments. You will need to sign a form 17 to declare the ownership shares and the tax implications. It is important to note that joint ownership has both advantages and disadvantages. The advantages include sharing the costs and having equal rights to the property. The disadvantages include the joint liability for the mortgage and the need for all owners to agree on any decisions regarding the property.

In conclusion, getting a mortgage with a Trust Deed involves several legalities and processes. It is important to seek the advice of a conveyancer and ensure that all legal documents are signed correctly. The Financial Conduct Authority regulates the mortgage industry, and they require lenders to ensure that borrowers can afford the repayments. Therefore, having a Trust Deed may affect your chances of getting a mortgage. Additionally, if you are a landlord, you need to ensure that your mortgage lender allows you to rent out the property.

Potential Challenges and Solutions

Dealing with Poor Credit History

If you have a Trust Deed, it is likely that your credit history has been affected. This can make it challenging to secure a mortgage. However, there are solutions available to help rebuild your credit rating.

One solution is to obtain a copy of your credit report from credit reference agencies such as Experian or Equifax. This will enable you to identify any errors or inaccuracies on your credit file that may be negatively impacting your credit rating. You can then contact the relevant agencies to have these errors corrected.

Another solution is to use a credit builder product. These products are designed to help you rebuild your credit rating by making small, regular payments on new credit. This can help demonstrate to lenders that you are capable of managing credit responsibly.

Managing Unsecured Debts

If you have unsecured debts, such as credit card debts or personal loans, this can also impact your ability to secure a mortgage. However, there are debt solutions available that can help you manage these debts.

One option is an Individual Voluntary Arrangement (IVA). This is a legally binding agreement between you and your creditors to repay your debts over a set period of time. This can help you manage your debts and improve your credit rating over time.

Another option is a Debt Arrangement Scheme (DAS). This is a government-backed scheme available in Scotland that enables you to repay your debts over a longer period of time. This can help you manage your debts and improve your credit rating.

Rebuilding Credit Rating

Rebuilding your credit rating can take time, but there are steps you can take to help improve your chances of securing a mortgage.

One step is to make sure you are registered on the electoral roll. This can help demonstrate to lenders that you are stable and have a fixed address.

Another step is to make sure you are paying all your bills on time. Late payments can negatively impact your credit rating, so it is important to ensure that you are meeting all your financial obligations.

Overall, while having a Trust Deed can present challenges when it comes to securing a mortgage, there are solutions available to help you manage your debts and rebuild your credit rating. It is important to seek professional advice and guidance to ensure that you are taking the right steps to improve your financial situation.