first time buyer with rubbish credit rating..?

saver_gem

I am 29 and have approx £12,000 debt (old loan which am paying off in monthly installments to debt collection agency) i earn approx £20'000. I know my credit rating is going to be rubbish, i have a basic bank account and the bank will not upgrade it to a currnt account. Is it likely i will have trouble getting a mortgage? Would i have a higher interest rate than someone with a good credit rating?

Cannon_Fodder

As you have that debt, you presumably have no deposit?

In which case the answer to "Is it likely I will have trouble getting a mortgage" is Yes. Lots of trouble.

Not a question of a higher interest rate.

You need a desosit. And a lender will spot your debts and realise any deposit you may be able to rustle up is effectively (even if not in anyway directly) borrowed from your debts.

saver_gem

what about if i had a deposit of maybe £5000 and £9000 debt?

Yorkie1

Sorry to be blunt but you have no current chance with the history you are describing.

Minimum deposit is 10% of the sale price. With the £5K you mention, that's a mortgage for apx £45K and a house purchase for no more than £50K. But the £9K will be taken off what you are deemed to be able to afford, thus a much lower mortgage offer even if a company was prepared to lend to you. And you will face high interest rates a) because the deposit is so small and b) because you are a higher lending risk given your history.

And those figures are before you add in the amounts you will have to pay to buy the house. There is often an application fee for the mortgage, survey, solicitors fees, searches. That's another couple of £K - so your available deposit is now only £3K ...

You really aren't in a position at all to consider buying a house at the moment. You must clear your debt, clean up your credit history for a couple of years, get saving then for a deposit, and then think again.

saver_gem

Go ahead, i have no idea, thats why im asking. That answers my question, thanks

_Andy_

With the adverse credit you'd need a lot more than 10% deposit.
Keep plugging away at saving/paying off the debt - the mortgage idea isn't going to be viable for some time.

saver_gem

i have a pretty good deal at the moment with rent, so guess i better grow up and get saving finally

23rdspiral

saver_gem wrote: »

i have a pretty good deal at the moment with rent, so guess i better grow up and get saving finally

good luck with saving. humm, maybe take a look at the Old Style board, it's all about thrift! ideas on how to start are here: https://forums.moneysavingexpert.com/discussion/1826625 :money: