Advice on how long to wait for mortgage application?

[Deleted User]

My wife and I got ourselves into a bad place of debt over the past few years - approximately 40k on credit cards. We always paid on time and have never missed any cc or mortgage payments. We did however have 3 consecutive late payments (£5 each) on a catalogue back in 2007. These show as yellow 1s on my credit report.

We haven't added to our debt in 18 months and have been paying off as much as we can every month. Due to inheritance we are about to pay off all our debts. With money left over.

We really want to buy a family home that is being sold shortly. With the inheritance money we will be debt free with a 15% deposit. With salaries of 39k and 20k we can in theory get the mortgage we need.

Advice I would appreciate:

- will our previous debt stop us getting a mortgage even though we never missed payments (with exception of late 2007 catalogue payments)

- how long should we wait after paying the debt before applying for a mortgage? We would need to apply within a couple of months of the debt being repaid to get the family home?

Are we taking too much of a risk with a mortgage application? We really don't want to lose the house but worry we won't get accepted and so are best staying put.

Any advice or past experience would be very much appreciated.

blueberrypie

Your previous debt will cause some lenders to turn you down, but others will be willing to consider you. It would be best to speak to a whole-of-market broker - they know which lenders are fussy about which criteria, and so can place your application correctly, rather than applying to lots of lenders and putting lots of searches on your credit record. They will also be able to guide you through the timing, and explain the best way to achieve what you want.

Please take this next bit of advice in the spirit in which it's offered: before you buy a property, make sure your attitude towards money and your financial behaviour are sorted out. As you say, you have got yourself into a lot of debt. Sometimes when people are able to clear a debt out of an inheritance (or gift or similar), they take the opportunity for a fresh start and become very good with money. Sometimes they simply pay off the debt and continue with the same habits that caused it in the first place - and end up in more debt. You do not want that to happen again, especially if it means you lose your home.