First time buyer poor credit rating advice needed!

dan22031986

Hi All,

Me and my partner are thinking of buying a home together this year at some point. The situation as it stands is that she has a perfect credit rating, and i have an abysmal one! I dont have any debt (just finished paying off my £5000 worth this month ) but i do have a lot of missed payments. I wont be having any more now it was just while i was juggling debts i was missing payments to get rid of others etc etc.

I'm wandering whether this will complete write off our chances of getting a mortgage?

Also are they any first time buyer deals that need very little deposit? like the homebuy direct? or Rent to home buy? ive also heard something about equity loans?

We probably can raise a 10% deposit, but will my credit rating make that pointless?

Any help or advice would be gratefully received!

Cheers,

Dan

princeofpounds

It will not completely write off your chances, but these days it will write off 90% of them. Banks aren't lending much right now so will lend to better risks first all else being equal.

There aren't so many deals with small deposits either. You will pay a lot more interest if you have a low deposit. But phsyically getting a 10% mortgage is at least possible.

There aren't really any schemes that truly help first time buyers. Shared ownership can be a hassle and lead to inflated property prices, but it works for some particularly if considered key workers.

If your salary is not needed to cover interest payments then your partner might be able to apply on her own, but then you will not be allowed part-title to the house.

To be honest, it all sounds very marginal, and I think what the system is trying to tell you is that you can't afford a house quite yet. But with a 10% deposit you might get somewhere. If you are really set on it you should feel free to at least try, just don't get too many credit searches done as that will further affect your credit rating.

A good mortgage broker (see Martin's article) should be able to give you 'live' advice on your situation and what products may work for you

dan22031986

thats what i thought to be honest.

So if we got a 10% deposit together, would considerably increase our chances.

Also presuming, it takes 6 months to save for our deposit, and also presuming i dont miss any payments on anything in those 6 months (which would be difficult as i have no payments to make ) would my credit rating have improved by then? I think the sticky things on it are about 4 missed payments in the last 12 months and one default from 5 years ago.

Thanks for the help!

dan22031986

Also, could a bank loan be used as a deposit?

rsykes2000

dan22031986 wrote: »

Also, could a bank loan be used as a deposit?

Very unlikely. You would have to state the reason for the loan and you are unlikely to get it if it is for a house deposit. Also, it would impact on the lender's affordability calculations meaning they wil take off the monthly repayments from your income when determining how much to lend you.

rsykes2000

dan22031986 wrote: »

thats what i thought to be honest.

So if we got a 10% deposit together, would considerably increase our chances.

Also presuming, it takes 6 months to save for our deposit, and also presuming i dont miss any payments on anything in those 6 months (which would be difficult as i have no payments to make ) would my credit rating have improved by then? I think the sticky things on it are about 4 missed payments in the last 12 months and one default from 5 years ago.

Thanks for the help!

4 missed payments will have a negative impact. A default, more so.

angrypirate

It will wipe out your chances of getting one. It wont wipe out her chance of getting an individual one. If you love her and trust her and she can get a big enough multiplier on her salary, then it may make more sense for her to get one in her name and you pay her half of the mortgage. Otherwise you may get stung with a higher interest rate as your credit history shows that you are a risk.

dan22031986

yet again thank you all very much for your advice! well my default will have gone in 9 months time, and also by that time i will have had no missed payments in the last 12 months.

Will that effectively bring me to the level of a normal person?

poppysarah

Why not work on your credit rating for the next year and both try to save a deposit up.

dan22031986

yeah we think thats the best plan too, should be able to save up a very considerabole deposit in that time aswell, but will the 12 months be enough to make my credit history better? as my default will be gone by then?