What do we do?? FTB

Danni.135

Hi there,

I've posted a few times as to what myself and my partner should do about getting our first mortgage.

Together we have a joint income of £51,000 and will require a mortgage for around £50,000, we will have a deposit of £9000 by March.

We initially looked at shared equity properties, but have decided to start looking at lower valued properties accepting that this wont be our dream home but will hopefully allow us to get a better home in 5 years or so. It will also mean being able to save more money each month due to the lower monthly payments.
We are currently living with his mum, saving around £800 per month. We are ideally looking to buy somewhere in March/April.
We have found a property we would be keen on making at offer which is within our budget, it has been on sale for 12 months so could still be available within our timescales.

Neither of us have parents with a massive income so are unable to have them as guarantors with some of the high st lenders. We have less than perfect credit files, but everything is up to date, and well within our affordability.

What should our next steps be? Should we be making an offer even though we may not get a mortgage due to our credit history? Any help would be very much appreciated.

Thanks!

Senior_Paper_Monitor

Go and see a whole of market broker ?

GMS

What is the problem(s) with your credit rating?

You should speak to a broker if you think you will have issues.

Danni.135

Thanks, I'm guessing they would be used to helping people that haven't got a shiny credit file?

Should we be speaking to a broker before making an offer and getting a final price in mind?

Danni.135

I have a few late payments, all up to date now, he has 1 default from a few years ago.

GMS

When was the default and for how much? Is it settled now?

Do you have any loans or credit cards? If so how much?

A good broker will know what can be done for you, if anything. If you have a poor credit rating you will be looking at 20% deposit minimum required.

Danni.135

The default was for a credit file, which was settled 2 years ago. I believe this should drop off in around 2 years time.

Our current debt (cars) totals to around £16,000 - all will be paid off in 2 years time - monthly payments total £480.

I will have a look for a broker and hopefully we'll be able to get an idea if we'll get something.

Does the fact that we're looking for something way under our affordability mean we have a better chance to be accepted?

Thanks,

GMS

Who said it was under your affordability? Each lender has different rules.

The fact that you have 16k of loans will impact on the amount available.

That said you are looking for 1 x salary so hopefully the loans would fit within the calculations.

Default will harm credit scoring but having perfoming credit should help. You said you had missed payments too. What were these on and when?

Get copies of your credit reports from Experian and Equifax. £2 each for statutory reports

Danni.135

My late payments were for my car (dispute), and a credit card which has now been paid off.

My guess on affordability was from using numerous calculators on lenders websites, which do tend to include monthly loan repayments. We usually get results of £100-150k.

I will keep you updated on my progress (if it happens!).

Thanks for your help.

GMS

Missed payments on credit commitments which are to remain will sound alarm bells for a lender.

The question will be 'If you cant maintain current credit how will you manage with a mortgage and household bills?'

There are lenders who do not use credit scoring but the same question will be asked.

Try to get as big a deposit as you can but you are probably looking at 20% minimum.

Danni.135

Of course, the car late payments are currently under dispute due to compensation credited to my account for a breach of dpa from the lender....even though the credit was applied to my account and I was advised not to make payment till this credit runs out, I have 4 late payments on my credit file - I am currently in talks with the lender for having these removed.

The credit card, was my own fault for not having a direct debit set up.

We are in a much better position financially due to pay rises and lower outgoings.

I didn't realise there were lenders who don't use credit scoring....I'm assuming the interest on these would be ridiculous?

I think our best option is to wait for the dispute on my credit file to be resolved, try and save up another few thousand pounds then at least we've covered the 20% deposit.

Thanks again.