is a large CCJ going mess up our plan

Tuscan

we plan to move in 2 yrs, down grade and release equity to settle my debts and put a large deposit down on new home.

have several defaults and 1 CCJ after going on a debt management plan with the cccs 5yrs ago.


ill cut a long story short as ive posted details before

the CCJ was for 27k and is being paid off monthly as per court order and ive never missed a payment in fact ive always over paid. £250 per month

ive also never missed a cccs payment and currently pay £420 per month and have increased it yearly from £300 in year one.

mortgage is £500 per month with about 75k outstanding, house is worth £180-£190,000 also never missed a payment in 9yrs.

looking to move to a more rural area and buy a house for £130,000 max.

in 2yrs my debts will be about 40k inc CCJ. and mortgage i guess 70k or less

so my options as i see it..
(1)
we will have about £110,000 equity to play with, so could pay off all debts and have 70k+ to put down giving me over 50% deposit and totaly debt free apart from mortgage.

(2)
put a bigger deposit down and then just pay off the CCJ, been offered a settlment of 17k in the past

(3) just put the lot down as deposit, then have a tiny mortgage so can put all spare income into paying debts off, at my current rate the cccs plan has about 5yrs to run, the ccj at my current payment will take for ever as they are slapping me with interest, hence why we want to do this..


so with such a large CCJ am i just dreaming that ill get another mortgage?

your views/advice please

opinions4u

I think you'll struggle.

See a broker who specialises in this sort of thing. Don't knock on the door of half a dozen lenders getting credit searches done.

Tuscan

really, even with as much as a 80% deposit.

wont go knocking on doors as you say and we are looking at 2yrs away so maybe there will be more lenders dealing with sub prime again. prob try Nationwide as we are currently with them so might be worth a shot..

worth mentioning that all my creditors are fine with me and happy with the payment they are getting, Natwest are the ccj creditor who were total B******ds and would not except anything but the full 27k, they got a bit of a slap down in court by the judge who wasnt impressed with how they had treated me and they didnt get there way on either the payment they wanted or a charge on my house but she had to grant the CCJ as had no choice..

luckyfool

You talk about these problems occurring 5 yrs ago. Have you seen a copy of your credit file? If any defaults resulting from the debt management plan, and any court judgement are over 6yrs old at the point when you are applying for a new mortgage then they would not be taken into account.

Thrugelmir

Why not downsize now? Clear the slate so to speak, and start rebuilding your credit rating.

If you are incurring high interest on the CCJ surely its best to clear it?

Once you've cleared your debts you can then overpay your mortgage until such time as you want to move again.

Tuscan

The CCJ is only 2yrs old as thats when Natwest took me to court, also isnt it still on your credit file until 6yrs after its settled?


cant down size yet as need to stay in my area for a few more years due to my work and a few other reasons mainly our son is 19 and need to wait for him to get settled first also theres nothing cheap enough near by our area so we will be moving around 80 miles to enable us to still have a house but at a far cheaper price. also a few years down the line i would have paid a lot more off the debts apart from the ccj as the others have stopped all interest and charges. also i hope the chances of getting a mortgage will be better in a few years when the climate has settled more.

either way the question still remains about having such a high CCJ and even getting a lender to take me on now or later?.

other choice is try to save up or over pay the current mortgage so as to get the equity upto 130k then sell up and buy outright so wont need a home loan

Conrad

Ok the bottom line;

If you were applying today then it's a definite no. Equity wont come into it because the regulator states all mortgages must be suitable for the person and no underwriter would be able to sign off such a deal as sutiable and responsible. Being able to repossess and having a good equity cushion will not influence whether a loan is 'responsible' or not.
The FSA would expect a lot more time to have elapsed before an underwriter could reasonably claim a new mortgage is suitable for you.

Having said this, there are a couple of lenders that may say yes even today, but thoer rates are 13% and up, which is too high for most, and usualy fails the affordability rules unless your income is very high in relation to the new mortgage (say an income of £50k and a mortgage of only £60k for eample).

2 years from now you might stand a better chance but it will all depend on the affordability / responsibility tests. Keep in mind lenders will likely take the full monthly payments into account for any debts within a DMP and not the reduced sum you actualy pay.

Then there is the possibility any lender has to get the written approval from the DMP that you are allowed to use funds to buy a new home RATHER THAN TO CLEAR THE REMAINDER OF THE DMP debts.

SUMMARY

Possible, but will be expensive and there will be many issues to overcome.
The daily mail and others keep crying out for lenders to lend responsibly and everyone cheers. Well the result of all that is people like yourself cannot access funds easily.

Tuscan

thanks

we have been chatting today me and the mrs and are now thinking we may still wait upto 2yrs and pay off as much as we can, and also gain more equity in the house but maybe sell up and then rent in our chosen area for a year or two, that way im thinking we will have around 120k in our pockets after paying off the mortgage. we would then settle up every penny we owe including cccs and ccj which is about 40k leaving us with about 80k in the bank and debt free.

we can leave the 80k in the bank or maybe even buy a cheap flat cash and rent it out? we could also save up a fair bit of money in that time with all the debt gone and just the rent and day to day cost.

with all debts cleared and a yr or two behind us we could try to buy again and then put the 80k down on a 140k house or if we have a rental flat sell it and put the proceeds down as the deposit again will be similar amounts.

what do you think on us getting a better deal with all debts cleared and a yr or two behind us plus a big deposit 50%+ i guess the ccj still shows up even if its settled in full.

Thrugelmir

Tuscan wrote: »

thanks

we have been chatting today me and the mrs and are now thinking we may still wait upto 2yrs and pay off as much as we can, and also gain more equity in the house but maybe sell up and then rent in our chosen area for a year or two, that way im thinking we will have around 120k in our pockets after paying off the mortgage. we would then settle up every penny we owe including cccs and ccj which is about 40k leaving us with about 80k in the bank and debt free.

we can leave the 80k in the bank or maybe even buy a cheap flat cash and rent it out? we could also save up a fair bit of money in that time with all the debt gone and just the rent and day to day cost.

with all debts cleared and a yr or two behind us we could try to buy again and then put the 80k down on a 140k house or if we have a rental flat sell it and put the proceeds down as the deposit again will be similar amounts.

what do you think on us getting a better deal with all debts cleared and a yr or two behind us plus a big deposit 50%+ i guess the ccj still shows up even if its settled in full.

Personally I believe you are tackling this the right way. Clear the slate and start afresh. Without the "debts" hanging over you , life will be a lot less stressful and more enjoyable.

I would caution against buying a property to rent. Use the money towards your next home. They are reasonable fixed term rates for deposits at the moment.

Best wishes for the future.

Tuscan

thanks



what we need to find out though is if we go down the sell up and rent for a few years will we still have problems getting a mortgage 2yrs down the line even after being debt free for a few years with a huge deposit?



suppose the next question will be how hard is it to rent with a bad credit file, i guess we could pay well in advance say 6-12 months up front if needed.



we just keep kicking our selfs for being so stupid in the past, but just want to get it paid off and move on. just lucky we have the equity or we would be well and trully stuck....

Thrugelmir

Tuscan wrote: »

thanks



what we need to find out though is if we go down the sell up and rent for a few years will we still have problems getting a mortgage 2yrs down the line even after being debt free for a few years with a huge deposit?



suppose the next question will be how hard is it to rent with a bad credit file, i guess we could pay well in advance say 6-12 months up front if needed.



we just keep kicking our selfs for being so stupid in the past, but just want to get it paid off and move on. just lucky we have the equity or we would be well and trully stuck....

Maybe it will take time. But at the least the future is brighter. If you deposit the funds and save with a potential new lender this may even earn you brownie points.