Middle-aged 1st time buyers, poor credit, help !

Kev64

Hi,

My wife and I are in our 40's and living in privately rented accomodation. We've decided that we really need to finally get our own place, but neither of us have ever owned a house before, nor had a mortgage, so we are complete novices on the subject.

The problem we have is that her credit rating is poor, and mine is good with the exception of a defaulted (but satisfied) loan in 2003. Having said that, I have been refused twice recently when trying to get new credit cards to balance transfer to. She is also likely to have a CCJ issued against her in the near future over unpaid credit card debt.

We have no savings and therefore cannot put up any deposit, so a 100% mortgage is our only option.

What I'm trying to find out is:

a) Do we (or just I alone) have any chance of getting a mortgage at all ? - or are we likely to be refused point blank ?

b) Would it be better for me to apply solely, seeing as her credit rating is so poor ?

c) Is it possible to get 100% mortgages ? (I told you we were novices !)

d) Assuming it would be better to leave my wife out of the mortgage application, what sort of figure could I borrow based on my income of about £25,000 pa ?

Many thanks.

Cheers,

Kev.

inmypocketnottheirs

To answer your points one by one:

If your wife is likely to get a CCJ shortly, this is going to prejudice any chance of getting a loan, at a decent rate anyway. IMHO you would be best doing everything possible to prevent a CCJ, correspond with them and see if you can work out a payment schedule.

I think you would probably get a mortgage with one of the 'sub prime' lenders, who generally charge a higher rate than the mainstream banks or building societies. This is because you are a higher risk and they load the interest rate because of this.

If your wifes cerdit report is adverse, and shows recent defaults etc, then you may be better applying in your own name.

100% mortgages are available generally, but you may again pay a higher interest rate because of the risk. Additionally, there may be an 'indemnity premium' if you borrow 100% to cover the lender should you default.

Normally lenders look at a multiple of joint or sole incomes, typically 3 times the annual figure. Therefore if you earn 25K then they will lend you £75K.

If you speak to a broker, he will be able to give you qualified advice, but you want to speak to someone who gives 'whole of market' advice, i.e. someone who does not just represent one bank or building society, so ask them when you speak if they give whole of market advice.

Can I just ask, and don't be offended, if your wife is having 'credit problems', is it wise to consider buying at the moment, cos if you are under financial pressure, house buying will only add to your problems. There are survey fees, solicitors costs, possible stamp duty, moving costs etc etc. Not trying to put you off, but I doubt if buying your home will reduce your outgoings, you have building insurance to pay as well.

Anyway, hope this helps. Best of luck!

Ember999

Kev64 wrote:

Hi,

My wife and I are in our 40's and living in privately rented accomodation. We've decided that we really need to finally get our own place, but neither of us have ever owned a house before, nor had a mortgage, so we are complete novices on the subject.

The problem we have is that her credit rating is poor, and mine is good with the exception of a defaulted (but satisfied) loan in 2003. Having said that, I have been refused twice recently when trying to get new credit cards to balance transfer to. She is also likely to have a CCJ issued against her in the near future over unpaid credit card debt.

We have no savings and therefore cannot put up any deposit, so a 100% mortgage is our only option.

What I'm trying to find out is:

a) Do we (or just I alone) have any chance of getting a mortgage at all ? - or are we likely to be refused point blank ?

b) Would it be better for me to apply solely, seeing as her credit rating is so poor ?

c) Is it possible to get 100% mortgages ? (I told you we were novices !)

d) Assuming it would be better to leave my wife out of the mortgage application, what sort of figure could I borrow based on my income of about £25,000 pa ?

Many thanks.

Cheers,

Kev.

Kev, what part of in your 40's are you? Because you have to bear in mind also that most lenders want your mortgage to be paid off by the age of 65 (unless in your occupation you retire at a later age?) so you are reducing your years available to pay a mortgage before you start due to your ages. You would end up with a ludicrous interest rate due to previous credit problems (defaults, CCJ's which stay on your record 6 years) and as you have no savings, you would require a 100% mortgage on probably your single salary. Do you really think it is wise to try to buy a house in a market which would not allow you to buy very much for the mortgage your salary would command? Buying and maintaining houses is very expensive and then you have to think about repair bills etc. I know most people aim to buy their own home but I imagine it will be very difficult with no savings, average earnings, previous defaults and a wife currently experiencing problems paying her bills and being in your 40's. I know my post sounds harsh but I am trying to be honest so that you don't end up making your situation worse by making what could be a very costly mistake. You need to think about this carefully. If after doing that you still feel it is a good idea, I wish you the best of luck.
Ember xx

AndrewSmith

Hi,

In my experience if you have any kind of adverse credit history showing on your file you are unlikely to be accepted for a 100% mortgage. There are some companies who will offer you 100% adverse credit mortgages but these are really 85% mortgages with a 15% secured loan usually at a rate of 15-16%.

I would seek advice from a local broker with whom you can discuss the case fully. He/she will be in a situation to advise whether what you are looking to do is feasable. Ask people you know for a recommended broker, failing that use local directories.

Be cautious of so-called adverse credit specialist companies.

Andy