FTB mortgage advice

catsy_2

Hello

Firstly can I thank you in advance for reading through this and helping in any way you can and here is my situation:

My partner and I recently got engaged and have decided that it's about time we got on the property ladder as we need somewhere bigger and to rent bigger would be the same cost as a mortgage a month (we currently pay £725 and could afford to go to £800 or maybe even £850). His parents have said they will give him approx 10K towards a deposit. I have some inheritance from my Granny, my parents had always said that if I need it for a deposit they would be happy for me to have it before she passes away. She is now unfotunately very ill in hospital and unlikely to come out. It will be 20K but this may now mean waiting for the money to come through after she has passed (don't mean to sound harsh just trying to get all the facts across without having too long a post!!) - possibly 6 months(?). Now for the difficult part, when I was 18 (now 24) I had a credit card with egg and they gave me a ridiculously high limit. Partly my own fault but I didn't really understand that if you didn't repay something every month this would affect your rating. Anyway I used it all and they debt was settled through my parents and payed off with the promise it wouldn't affect my credit rating. Now whilst this was going on we made no payments to the card and for the few months before I plucked up the courage to tell my parents about it I didn't pay. This ment I went over the 8 month time and it stays on your rating for 6 years.
Houses in our area are also very expensive, and we do need a house rather than a flat as we have a dog and need private garden of some sort. We're looking at anything from 180k up. That would mean a mortgage of anything from 150k plus. Oh and our earnings add to 30-35K.

Now for the questions:
1. Can I ask egg to remove the adverse credit notice? For the missed payments. there is nothing else on my file that is bad - just a few small debts, and we both have student loans and overdrafts (paying mine off monthly £150 and will be gone by xmas yay!!)
2. If I can't do no.1 will any mortgage lenders lend to us???

Thank you so much (again!!!) and I'm sorry that this is so long!!! I really hope you can give me a little advice on where we stand....

nw_man

Dont think you can have anything removed from your file. It will disappear after 6 years though, this must be soon ?

On another note, you have income of 30-35k and are looking for a 150k, that is 5x your joint incomes, I doubt if any lender will lend that much in the current climate.

benjaminM

Nw man makes a valid point about your affordability, you probably do not earn enough to do it on your own. It might be worth considering adding a family member such as parent to the mortgage to boost your affordibilty. This has a few legal issues and would need to be discussed with your advisor but it's definately an option. Your credit history may have an affect on what lender you can use but there are some that are more leniant than others. You could also consider shared equity or an equity share mortgage. Lots of the main house builders are involved with government schemes and they are a good way to get on the housing ladder.

HelpWhereIcan

catsy wrote: »

Now for the questions:
1. Can I ask egg to remove the adverse credit notice? For the missed payments. there is nothing else on my file that is bad - just a few small debts, and we both have student loans and overdrafts (paying mine off monthly £150 and will be gone by xmas yay!!)

Not if it is factually correct. from what you have posted it is as you owed the money, fell 8 months behind and then repaid it. You still defaulted so it is factually correct. Sorry.

catsy wrote: »

2. If I can't do no.1 will any mortgage lenders lend to us???

That depends on the size and age.

If it is in the 000s and within the last 3 years you will struggle.

If it is in the 00s and more than 3 years old you will have options.

However, your biggest issue will be the income multiple you are looking for.

I don't make it 5 times joint if your joint is 35 (150/35 = 4.285) but even with that at more than 4 times joint income you will really struggle.

Combined with the default you are likely to have real issues getting a mortgage for the amount you require but it could be possible depending on exactly what all your income from all sources is (and what those sources are).

Another option is (as benjaminM says above) for parents to help out so that their income can be used to support your application.

There are formal guarantor schemes, 'parent assist' schemes right down to a plain joint mortgage between you, your partner and your parent(s).

Get some advice from a whole of market broker.

Ideally use personal reccomendations to pick one or even something like the Yellow pages etc.

No harm in speaking to more than one and always make sure to ask the questions Martin suggests in http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1101649966,86816#step2.

Be careful of anyone who approaches you unsolicited and use the services of a face to face adviser unless you are confident enough to deal with someone via post & email.

Hope this helps

Good Luck

Bullfighter

Take a step back.

You are debt free.
You have £30k in cash.
You have a modest rent.
Houseprices will likely fall 60% from their 2007 peak in the next 12 months.
The UK (and European) economic situation is the worst it has been since... well it's NEVER been this bad.
Interest rates will HAVE to increase. Maybe as soon as next week.

Borrowing £150k to buy a small slave-box is madness.

Rent, save, enjoy married life, and buy a small house with cash in 12 months.


Jim

catsy_2

Thank you so much for all your replies, it's made things seem much clearer in my head now. Unfortunately the area I live in the house prices are ridiculous. Even moving to within an hours drive of our workplaces (both in the same town) we'd still be looking at not much of a drop. The issue is we need to move somewhere bigger as we both need to do a small amount of work from home and we don't have enough room in our shoebox of a rented 1bed house. To move to a larger one would be £800 a month minimum and this is the equivalent to a mortgage. My OH just cant see the point in wasting that sort of money in rent, he'd rather it was going on paying off a mortgage. I do keep telling him I don't think we'd get one on our wages though. I presume even if we could prove we could afford the monthly repayments we still couldn't get 5x our income??

Bullfighter

Unfortunately the area I live in the house prices are ridiculous

Then wait until they are affordable. Shouldn't be long now.

getmore4less

catsy wrote: »

To move to a larger one would be £800 a month minimum and this is the equivalent to a mortgage. My OH just cant see the point in wasting that sort of money in rent, he'd rather it was going on paying off a mortgage.

£180k @ 5% is £750pm interest. (renting the money)

So you take on all the risks of ownership for £50pm paying off the mortage