Help and advice needed

welshie2011

My partner and I are saving a deposit and have been for the last year. We currently have £10k saved and are going to carry on saving for another year-18 months and continue to save £1500 a month. We are also lucky that we will be recieving approx £25-£30k at the end of this year from a saving plan which part of can be used towards house deposit and rest into savings.

The concern is I don't have an ideal credit history. I had a default which is due to drop off my credit report this year. I have a credit card (no missed payments in the past 12 months) and two overdrafts (£3300 approx) which have been over the overdraft limit for several months. I have started making improvements and paying my overdrafts off each month. I have not been over the limit for the past two months and am confident my overdrafts and credit card will be cleared in 9 months. I have direct debits and standing orders for mobile phone contracts, car insurance etc.

Combined we earn approx £52k a year and would be looking to buy a home for approx £150,000 for our ideal family home. However we would be happy to reduce this to £130,000. When we come to apply for a mortgage we will have approx £200 a month in credit commitment such as mobile phone bills, car insurance etc and will have no debt remaining.

I am realistic that we need a hefty deposit to be considered with my credit history (partners is spotless) and we are hoping to be have £30K+ to use a deposit. Worse case and we don't get accepted together my partner 'should' be able to obtain a mortgage on his own (he earns £34k a year).

Can anyone offer any other advice? Thanks.

987654

Are you paying interest on your credit card & overdraft?

Assuming you are, have you considered using savings to pay these off & then saving more on a monthly basis?

It is likely to be costing you a lot more in interest on debts than you are earning in interest on your savings account.

Thrugelmir

Clear your debts before saving. Will enable you to improve your credit rating much quicker.

For whatever reason. Requiring an overdraft to live month to month is not a good sign of personal financial management.

welshie2011

The overdrafts aren't used for day to day uses but when I was at University and haven't been used for some time. I have another account (no overdraft) which I use where my salary goes into etc.
The overdrafts are interest free till the end of Jan 2012 which is why I'm paying them off. In hindsight I should have started paying this off months ago but while we're getting interest on our savings I don't want to use this to clear debts and am quite happy to clear each month.

welshie2011

Any more advice?

Basically looking to see if with my history and my partners spotless history and a £30k deposit on a £150k house we would be lucky to be considered for a mortgage.

Thanks,

Thrugelmir

welshie2011 wrote: »

The overdrafts aren't used for day to day uses but when I was at University and haven't been used for some time

So why are the limits exceeded?

and two overdrafts (£3300 approx) which have been over the overdraft limit for several months.

An underwriter will take a very black and white view. Easy to build a profile of a potential borrower on how they manage personal finances.

welshie2011

The reason why I was over the overdraft limit doesn't matter but it was a result of a bank charge which I wasn't aware of which caused me to go over the agreed limit and I wasn't aware of it as hadn't checked the account for sometime as I stopped using it when I left University. Simple mistake at the end of the day. The fact is when you look at my other account and day to day finances I'm very capable to managing my money. I can show an ability to save quite a substantial amount of money while paying off my overdraft each month.

I'm not looking to get a mortgage now, but in 12-18 months so I'm merely asking for advice on how likely I would be with my partner to get a mortgage with 12-18 months clear credit history.

Any help on this would be great.

shortchanged_2

Same advice as Thrugelmir I'm afraid. Clear your debts then continue with your savings plan.