buying a house with defaults

gambit27

Hi all, hope someone can advise, I have several defaults on my file, all from approx 4 years ago, all of which I am paying towards every month. At the time of default, I had just split with my partner, and was struggling financially, paying a mortgage, car loan, and all other joint debts (unfortunately all in my name!) my ex refused to pay maintenance for our 2 children, so I contacted all my creditors telling them of the situation, and telling them I should be able to pay of a lot of the debt after house sale which ex was stalling.

So, long story short, has anyone else been in a similar position and managed to get a mortgage? I couldn't afford to buy back then as I still had a loan and car loan, these were paid off in full last year, so I have been squirreling away the money I used to pay and have a nest egg gradually building, I currently rent, but wouldn't be out much more for a mortgage each month, and ultimately the home would be mine after the mortgage term.

I hope to be debt free by the end of 2012/2013 at the latest, do I rent until then when my defaults have gone then go for a mortgage? Or is there any way to get back on the property ladder now? The only reason I'm thinking now, is the house prices are really low, I can get a 3 bed semi in the area I want for £80,000 (few up for sale now) and I know the houses in question were selling for £120,000 minimum a few years ago.

Any advice on who to speak to, or what lenders to go to, how you did it, and how much deposit I should be aiming for would be great.

CloudCuckooLand

Why pay interest on your remaining debts, while having savings that are probably earning next to nothing?

You need time to pass to improve your default situation, so get the debts cleared now, allow that time to pass, during which you rebuild your savings - being able to do so more quickly having no interest to pay...

I wouldn't panic into thinking prices will go up by 50% in Glasgow any time soon.

Last 3 months of 2010 - "Glasgow's figure dropped by 12.2 per cent"... http://news.scotsman.com/glasgow/Edinburgh-loses-crown-for-highest.6708603.jp

G_M

When you sell a house you have to change the name on the Title at the Land Registry from yours to the buyer's.

If a mortgage is registered against the house, this can only be done witht the mortgage lender's permission, which they will not give.

So the mortgage has to be paid off (usually using the money from the sale).

At the same time you would be applying for a new mortgage, on the new house you are buying.

In some cases, lenders will allow you to transfer the mortgage 'product' from the old to the new house - ie you get the same discount interest rate/whatever, but this still involves the old mortgage being paid off and removed from the LR Title and new ones added.

gambit27

CloudCuckoo, there's no interest on the debt's I'm clearing off, all those ones were dealt with first, the savings can't be touched at the moment, as they're in a credit union account which I have a loan agreement on, so can't take them out even if I wanted to, which is a good and a bad thing I suppose! I'm on track to pay everything off, and it's not a massive strain on my finances atm.

GM, I don't have a mortgage, I rent my home, my mortgage was paid off in full at the sale of my last owned home 3 years ago, should have been more clear, I did eventually get the sale of the house I was looking for, and didn't default on the mortgage or my loans, just 3 credit cards, which have gone to debt agency's, and am now paying them back at zero interest.

Just thinking about saving in the long run with prices being so low in the area I want at the moment, doubt they'll stay that way for long! It was a long shot, but just thought I'd ask if anyone was in the same boat.

Moglet

If you've nothing else adverse on your file apart from 4 year old defaults and you also have some "good" data there then if it were me I'd keep saving for the next 2 years until the defaults drop off. Then your file will be totally clean and you'll have a nice deposit. Won't matter even if you haven't finished paying the defaults off as they won't show.

The other option is to ask the creditors if they'll take a F&F settlement. This will be marked as a partial settlement most likely on your file but again, after 2 years no-one will be able to see it. If you do the F&F route, make sure you get advice to do it right so they can't chase you for the rest or sell it on later.

gambit27

Thanks for that Moglet, it is just the default's from back then, which only happened because of my change of circumstances. Since then my car loan, credit union loans (I do this every year for xmas pressies then pay back by November, keeps my savings building and safe!) and personal loan have been fine.

Last question, are the credit building credit cards a good idea? I applied for a normal card to start rebuilding my credit, but of course got declined due to the defaults, but am wary that if I apply for credit with no credit history, that won't look great either.

Moglet

Your personal loan should be on your file and will show for 6 years after it was settled. If it was paid each month on time then that is some positive credit history. Same with your bank account, esp if it's shown not to have been overdrawn or over agreed limit. Got a mobile contract, that will be on there too. Your old mortgage, again, that will show for another 3 years as positive data.

Do you mean cards like Capital One etc or those you pay for a fee for and sort of prepay? Anything that is reported on your file and you pay in a timely fashion will be good for your file until you tip the balance of having too many accounts which can lower your score, apparently.

gambit27

Yeah, the Capital One card seemed a good option just to get credit rolling again, but hadn't thought of other factors like my mortgage, and car loan which were settled a year and 4 years after the defaults respectively, totally forgot these will show on my credit report so thanks for the reminder! At least I will have some good credit to show on the report once the defaults have gone, counting down now, a year and 8 months till a default free credit report