Mortgages & past debt probs - advice please

pennylewren

Well, where do I begin???

The bottom line - we have a mortgage of £110k on a £140k property with 19ys remaining. We owe £24k on the old credit cards & have been going through the CCCS since Nov '05 to repay the creditors. We are NOT behind with the mortgage, council tax etc.

We have 3 children under 4 (so I can't work) & my husband is employed f/t earning £20k ish a year - last year he earnined £25k with overtime.

Now, we are only paying a basic amount to the CCCS at the mo & at this rate it will take 31yrs to clear our debts.

Anyway, we have had a thought of selling our house, repaying the mortgage & credit card creditors & hence walking away debt free. The thought is that we would move in with parents for a couple of years (they have agreed - their suggestion) & in the meantime save, save, save to get a deposit to start again & buy the bigger house we desparately need.

Now, does anyone know if we would get a mortgage again? I think it would have to be a self cert one for us to get the amount we would need....

I don't really want to sell my house & do all this to find that we can't get a mortgage & are no financially better off. I don't really want to sell my house at all - but we desparately need a bigger home & I can see this as the only way forward in the long run. Otherwise we are stuck here forever.

I am so worried & confused it is untrue. My husband works all the hours he can (night work).

Any advice??

Thanks

AndrewSmith

Hi,

It really will depend on how you conducted your accounts before going to the cccs. Eg if any of then were defaulted or had ccjs issued.

Also it depends on how things are managed between now and when you apply for your new mortgage.

You mention self cert for the new mortgage. Self cert is mainly appicable only in the following circumstances

You are employed but earn mainly commission or irregular income
You are Self Employed but have no audited accounts to show your income
You are a combination of employed and self employed but cannot prove your self employed income
You have only been self employed for a short time and have not yet produced accounts.

Self certify does not change or increase the amount you earn, as the normal income multiples are still applied to the income you declare. It is solely for people who cannot prove their income of have employed income such as commission which is not guaranteed.

Think carefully about selling though, I think you would be wise to seek professional advice before commiting to anything.

Andy

pennylewren

Hi, Thanks for the reply. We nipped the debt problems in the bud just as we realised that things were getting out of hand & so thankfully have no cccj's etc. The thinking was to pay off the creditors with the equity we would get from selling our home.

My husband earns £25k & to get the house we need here we are looking at around £200k. We offered a £150k self cert mortgage via a Ward & partners mortgage adviser back in 2003 when my husband was employed & earned £13k a year - which was what made me think if a self cert in the future...maybe things have changed in the mortgage world.

Don't quite know where to go for professional advice - hence coming here - would feel too much a prat to ask a mortgage adviser in an estate agents these qus!

AndrewSmith

£150,000 mortgage from a salary of £13,000 is both irrisponsible on the part of the adviser offering it to you, would most likely be un-affordable, and is classed these days as mortgage fraud. There is not way on earth legally that he could have ever actually got you such a mortgage without him lying to the mortgage company about your income.

These days, although self cert usually requires no income verification, it is not unheard of for the lender to request evidence of earnings if they feel the case doesn't quite stack up. They are, after all, under no obligation to lend you anything and can refuse your application without reason at any stage.

They also reserve the right to request references or evidence to prove anything you state on the mortgage application form. It is their money after all.

Any broker or adviser who offers you £200,000 on a salary of £25,000, which is 8x income !!!!!, is leaving both himself and you liable for prosecution for fraud, but also invariably giving you a mortgage which you will not be able to afford and put you right back to square one again. ALso for self cert you need at least 15% deposit to get a rate any where near high street. The monthly repayments on an average selfcert £200,000 mortgage would be in the range of £1,150 repayment over 25 years or £800 interest only.

Dont be tempted by the offer of a large mortgage, the broker who is giving it to you wont care if you are reposessed once he has been paid his commission.

As for where to go for professional advice? You are starting in the right place here as the brokers or advisers on here do this for free without personal gain. Ask away, we will help where possible.

Andy

MortgageMamma

He should be named, shamed, hung drawn and quartered.

Scoundrels like that need booting up the backside and out of this industry!

pennylewren

Right. Thanks for the replies.

This has highlighted what I was worried about. From what you are both saying, with a sole income of £25k the best we could really hope for would be a mortgage of £110k ish - which is what we've got now. Added to that it could be at an unfavourable interest rate due to past credit problems....

So, we could sell up & clear the credit card debt but still only be able to afford the same mortgage we have now & hence the same size house etc - well probably smaller house if the house prices continue to increase.

Bottom line - is £110k mortgage the most we would get with a sole income of £25k??

AndrewSmith

Depends on the exact situation and circumstances, but more than likely yes.

Sorry it's not what you wanted to hear but rather find out now that later I guess.

Andy

herbiesjp

Totally agree with everything Andy and MM say above.

Self cert is a suitable product used in the correct circumstances.

In this situation it is not, and is tantamount to fraud - do not use this route.

You might want to go to the FSA with your story - the fewer of the these sorts of threads we see the better - and it will hopefully mean that fewer advisers will go down this route.

pennylewren

AndrewSmith wrote:

Depends on the exact situation and circumstances, but more than likely yes.

Sorry it's not what you wanted to hear but rather find out now that later I guess.

Andy

Hi, No I am glad to know the bottom line. Otherwise we could make all these decisions to end up no better off really & have the upset of moving in the mean time.

I really do appreciate your honesty & patience in replying to me!