clear debt in time for mortgage - sorry bit of a long one!!!

claire999

hi thanks for all your replies, my annual sallary is £12014 - soon to increase and OH is £12,500, we cannot stay any longer at inlaws after March, we were only suppose to be there for max 6 months it is now over 12, i think that if we cannot buy now we will have to rent - as this will be our only option, but renting in our area is about £600+ as it is favourable area due to the excellant schools.

lynzpower

claire

where abouts in the uK do you live?

all_hours

Couldn't you move into a cheaper area for the next year?

Do you children at the moment? If not then schools wouldn't be an issue for the next couple of years.

quantumleap

You are faced with a difficult decision. Unfortunatly it appears you've come to the realisation that you need to take action to combat you're debts too late in terms of you're living arrangements anyway. At the same time however, it is good that you've now realised you've got a problem.

The reality is that if you take on a mortgage you most likely aren't going to get a particularly attractive deal and you aren't going to have a lot of spare cash to pay anything other than the minimum payments on you current debt.

This means that you are going to be paying you're current debt off over a very long period of time at shockingly high interest rates.

If you get a mortgage deal at 125% you're property will immediatly suffer from negative equity. I presume you will use the extra cash to clear the debt. Whilst I nor any other member would suggest you do this, it appears it is still you're preferred option.

If you do this then you must ensure that you pay off all of you're debt and close ALL you're credit/store card accounts. In order to do this both you and particularly you're OH's attitude to money and debt has to change considerably. I still think you, as a couple, are some way off that, to be honest.

If it were me, I would try to persuade my in-laws that me staying with them and paying more in rent would help their financial situation as well as mine. Failing that, I would rent the smallest property with the lowest rent I could find. I would use all my spare money to pay off my debts using the snowball method. When I had cut my level of debt by somewhere between 50% and 75%, I would discuss my situation with good independant mortgage brokers and review things.

You are only 21. You have a real opportunity to rid youself of debt before entering the big bad world of home ownership/marriage/kids etc. I know what I would do.

skintasusual

I very much doubt they could get 125% offered to them TBH
I think its unlikely anyway

where I live in london Its about £1200/month for a 2 bed flat

we moved 5 miles down the road and are paying £675

you dont have to move that far to get a better deal renting :beer:

flowerofscotland

Have you read Martin's piece on home ownership in his blog?
http://blog.moneysavingexpert.com/index.php?paged=2

Before you commit to a mortgage - especially one that will put you into negative equity - work out a proper budget that includes all the cost of owning instead of renting. There may not be as much difference as you think.

Far better in my opinion to pay off your debts and save for the fees/deposit before committing yourselves to a 30 year debt - THIRTY YEARS. Your OH will be 51 before the mortgage is paid off. Are you absolutely sure you want this type of commitment at your age?

Good luck with whatever you decide

claire999

thanks for your help it has really opened my eyes, i have no problem with money and never had, i never buy anything apart from the odd 10p coffee at work, i dont buy clothes, go out with friends etc but i had realised about 6 months ago that OH had a problem which now is being sorted, i will tell him that we will rent untill most of this is paid off and we have some sort of a deposit, i have also sent a email to my mortage broker who was encouranging us to apply for NR 125% together when OH was 21 saying that he should not have advised that this was an acceptable means of bushing this under the carpet.
We will still be able to rent though as they do credit searches etc and i have that default?

lynzpower

OK in respect of the default, I suggest you pay this off asap. Do you have the money to do this? If not when will you?

Id call Avon up NOW ( if you can!) and get the full details of how to settle this debt once and for all.

if you dont have the full amount and only have a fiver etc, Id offer that as goodwill, and tell them when you'll pay the rest off by.

I agree with you about your broker. It does seem somewhat irresponsible TBH.

When I took my mortgage, my broker told me the downsides of the products she was offering me, and when I decided on an interest only, she wrote me a letter clearly stating the risks involved in having an IO mortgage.

In my opinion 125% mortgages should be banned, they really are terrible.

For what its worth, i think youve made the right decision. One things for certain, in a few months of renting you will be able to see what efforts your fella is making to become debt free, and how it continues.

Becoming debt free can actually be quite good fun. theres some lovely people on here, and we all cheer each other on and up, and share tips on moneysaving ,as you know.

All the best
Lynz
x

lynzpower

in terms of renting, Im not sure whether that default will stop you.

I doubt your fellas parents will be able to guarantor the letting if they are skint.

You might want to ask on the property boards. In saying that, Ive never paid anything on time and I went months at a time not paying my credit cards (before finding MSE :A of course ) and its never stopped me getting rented accomodation

Also private renting ( ie out of the paper/ newsagents window/ loot etc) often dont do credit checks, whereas your estate agents & letting agents will

happygal_3

Could you or your partner not take on another job evenings/weekends to throw more money at your debt, it's coming up to xmas and loads of places are looking for staff.

You are about right with £1500 for fees. I am in Norfolk too and we paid £1200 two years ago.

Good luck whatever you decide.