First Time buyer with bad debt and large deposit!

Emme

g_attrill wrote: »

Ouch, I was going to say that as a disabled person you might get council accommodation, but of course you are too "rich" for that The other alternative is to rent somewhere nice and live without the modifcations (if you can) and then dwindle your savings down by not living so frugally, then go back to the council and explain that you can't afford to rent.

You haven't mentioned how old you are, but I would think that due to your income you would overall save a lot of money by getting a council/housing assoc rented place, and given you have no dependents you don't really need anything to pass on.

I'm 31 only just!
The problem with dwindling is I have 25-30 thousand to dwindle I'd rather put it into a property! I don't have any dependants yet! Hopefully will do one day.

Probably going to have to take the 11% mortgage, my defaults come off next august so could remortgage then anyway. I've figured if I take in a lodger (a friend of mine) for a year she would pay 250 a month rent. So that would leave me with 350 which is cheaper than Manchester rent anyway. Then in a year can remortgage when my other pension is through which has been now quoted at 450 per month and kick out my lodger!!!!! :rotfl:
(She finishes uni next year anyway so only needs to rent for a year and would rather rent with me as a bit cheeper)

Going to give the broker a few more days then find another one!!!

Thank you all for your help you have given me some much needed options.

herbiesjp

Emme wrote: »

Probably going to have to take the 11% mortgage, my defaults come off next august so could remortgage then anyway.

Think seriously about this.

You could find better - plus, the early repayment charges to leave this deal will probably be very high.

Cannon_Fodder

Emme wrote: »

Probably going to have to take the 11% mortgage, my defaults come off next august so could remortgage then anyway...Then in a year can remortgage when my other pension is through...

Really, really, REALLY bad idea.

If timing is tight, get another broker now. Use them to give second opinions. Or first opinions, if the first broker still hasn't answered...

Emme

Cannon_Fodder wrote: »

Really, really, REALLY bad idea.

If timing is tight, get another broker now. Use them to give second opinions. Or first opinions, if the first broker still hasn't answered...

I will get as many opinions as posible as I would like a better deal I just may not get one.

Why is it such a bad idea????
If I have to pay 400 or more to rent why not pay it on a mortgage given that I have someone who will pay me rent!

Emme

Cannon fodder, Let me rephrase having a reason why it is a really really REALLY bad idea may give me the insight I'm lacking

Can you give me examples and so forth, someone else mentioned the cancelation fees may be huge which is something I would have to check but are they other reasons why this is not a good idea.
I guess what I'm saying is if it is such a bad idea can you please scare me out of it!!!!!!

I have a big problem of seeing a way round something which makes me oblivious to warning signs

maninthestreet

If they are going to charge you 11% interest when the BOE base rate is only 0.5%, what are they going to charge when the BOE base rate is 5% ????

Cannon_Fodder

Some reasons this is a bad idea (some duplicates with other comments);

- Is 11% a Fixed Rate, if so the Early Repayment Charges, especially with a sub-prime product/lender/history, are likely to be prohibitive. They would dent your limited savings. Presumably you would also dent your LTV by putting the new product's arrangement fees onto the new mortgage, £999?, to protect your remaining savings. Which counteracts some of the benefit of getting a lower rate.

- Is 11% a Tracker (I hope not!), if so, in 12 months it could be 14% = £727 a month...and might still have ERCs. When rates revert to 5%, as indicated by MITS, will you be stuck on 15.5%?, i.e. £797 per month. I respect the way you can live frugally, but inflation may erode your ability to continue to do so.

- A 3% fee would be £1800, just to get out of the product. And you don't know what the new arrangement fee will be, £999?, on what will still be a difficult mortgage to place, due to the construction. What is the 11% arrangement fee ?

- £25k deposit is 29% of £85k, so LTV will be 71%. Appears good for future re-mortgage. But it only takes a small percent drop in house prices - which is not unthinkable at the moment with looming tax rises, public sector jobs losses, interest rates going to rise someday, etc etc - and you will fall out of the sub-75% LTV, into worse rates. Which together with the non-standard construction could be enough to offset your improved credit history (assuming the Lenders agree it counts as improved by next summer) and leave you with a rate pretty much the same as today's offer - except that if by then interest rates have risen, or are obviously about to rise, the Lender's will have priced that in, leaving you on 11% or even worse.

- If worse than small price drops occur, you run the risk of being unable to move from that Lender, at all. With little leeway in your income to overpay, you'd potentially be stuck for ages.

- I recommend running your whole credit history past the experts. AIUI, its not just when you actually default, but the settlement needs time to be shown to be an genuine improvement. Not my speciality, but what I've picked up from here. Might be wrong. If you were only writing settlement letters in April, I'm not 100% sure you will be fully in the clear, poor credit-wise, by next August. Depends on the detail of the issues. https://forums.moneysavingexpert.com/discussion/2411235

- the next 12 months could see changes to benefits, announced this week. I'm not sure this summer is the best time to be making assumptions about benefit income for the next 12 months and beyond. Does having a lodger affect council tax benefit? Might it in the future? If you have a pension starting in the next 12 months that will improve your situation substantially, I would lean towards 'buying time' where you are at the moment and seeing what next year brings. After all, if I'm wrong about your credit history, so that it stops being a negative factor, plus the new pension boosts the certainty of your income, it will make it an easier proposition - subject to the non-standard construction, again.

- This may sound illogical, but it may actually be better to aim for a normal construction bungalow, even though it might be more expensive - with your new pension you might be able to aim nearer to £100k to find one - in order to obtain long-term certainty that you can always re-mortgage, plus better rates whenever you do. As you say, Lenders would have lent, but for the construction...

Just 1 opinion...

Emme

Thanks for the time you put into this. It has made the situation a lot clearer.

gonna wait out the broker and leave the 11%!

Many thanks to you all.