Getting a mortgage after debt defaults

Bearo

I'm about to try and get a mortgage after having debt issues. I have one default still showing after clearing all my debts up, but that should disappear soon. Will I be able to obtain one or am I barred?

Bearo

Has nobody any advice?

I have had an offer today but there seems to be a bit of a catch. The interest is fixed for two years and then it's nearly 6% above LIBOR, whatever that is. I'm tempted to go for it only if I there is a chance that I can transfer to someone else afterwards.

Senior_Paper_Monitor

Who is the offer from ?

That rate is certainly high.

Much more information is needed to even guess an answer to your questions.

Are you you using a broker experienced in these sort of issues ?

What is the initial interest rate (2 years) - are there any tie ins ?

LIBOR (I assume that is 3 month LIBOR) is currently 0.82625% (BofE is 0.5%) and LIBOR would be considered more volatile than Bof E.

So you would be on a rate today of 6.8% and vulnerable to market fluctuations.

You are in dangerous territory and need professional advice if you are not currently receiving it.

Bearo

Thanks, Senior Paper Monitor.

I'd rather not name the company publicly yet.

It's 5.95% for two years then it's 5.10 above LIBOR after that which would be nearly 6% at present rates but if the basic rate rose dramatically say to about 6% then my rate would be 12% I assume.

My debts got bad 2-3 years ago. I sold my home to pay most of my debts and buy me a share in a shared equity property. When my home was sold my only debt was just over £2000 which I have now cleared completely. So I have no debt and a potential deposit of £30,000 to go towards a new property.

I'm intending borrowing about £70,000 over a 15 year period. Surely I shouldn't be punished by excessive interest for the whole period of any future mortgage?

With a salary in excess of £35,000 surely I can do better than this?

Senior_Paper_Monitor

The 'punishment' will not be over 15 years - hence my question about tie-ins.

Once the fixed interest period + any tie in is over you can get a new mortage with better rates based on 2 further years or so's good credit behavior.

If you won't say who the lender is - and with little information about credit status (absolute detail is vital), no information on LTV and many other relevant items, I can't comment much further on the deal or its suitability.

If you are using a true broker/adviser (you didn't answer on that point) presumably he/she has the information to select the appropriate product - if you are not using one, you are in the land of the vultures.

holly_hobby

LIBOR is shorthand for "London Inter Bank Offered Rate" - and is the rate at which banks lend to each other - which is NOT the same as, Bank of England Base (referred to as Bank Base or BOE base).

I'm a little worried that your adviser hasn't explained what this term means - and even more worried if they haven't explained because they don't know .. tread carefully as other peeps have said ..

Hope this helps

Holly