Advice needed - bad credit history, large deposit...

Ifyoucantbeatem · 26 July 2011 at 4:14PM

Hi,

This is a slightly complicated one, for which I'm hoping for some good advice.

My wife has recently come into quite a bit of money (not for especially happy reasons, but it couldn't have come at a better time as we were slowly drowning in debt thanks to a combination of bad luck and even worse judgement - I blame nobody apart from myself, so this isn't a sob story...)

10 months ago, I started on a Debt Management Plan with CCCS. It was the best thing I ever did, in terms of my health, sanity and positive future outlook, so I don't regret it for a minute as it probably saved my marriage and meant I was at last able to provide a happy home and food for my family. Since going on the DMP, my life and my family's quality of life have both improved immeasurably, but the downside is, of course, that my credit file is peppered with black marks.

My wife has no defaults and a reasonably good credit record - not perfect, as she has a loan and an overdraft, but everything is up to date and paid on time.

We're now in a situation (unbelievably) where we have £72,000 in cash to put down as a deposit on a house we have seen for £180,000 (that's keeping some back to cover fees, stamp duty, decorating etc), but still it's not that simple. I too have a mortgage on the house we currently live in (debts gone, but defaults/late payment markers obviously remain and were on debts totalling £53,000). My wife also has a buy-to-let mortgage on another house (she lived there before we met, and we couldn't sell it due to poor market conditions), the market's on it's proverbial, and we won't just give it away.

The mortgage on her house is covered by the rental income, and we will either sell or rent out the house we currently live in (£120k mortgage all in my name, value about £140k in current low market, rental value £650-£700 a month according to three local agents which will more than cover mortgage if necessary).

I'm very worried that my past defaults and missed payments will affect our ability to get this new mortgage despite the large deposit. If my wife applies for the mortgage soleley in her own name, will my adverse credit history even come into focus? I'm sure sensible people out there will tell us to use the £72k to pay down the existing mortgage, but we'll not be able to move for a while (in my name at least) if we do that, and our kids are getting bigger and we'd love to give them a garden to play in. That might not sound much to some of you, but it means a lot to us.

So, please no preaching, or telling me how we should do things differently. The bottom line is we have a dream idea, and want to know if it's attainable - do we stand a chance of getting the mortgage? Should we apply in my wife's name only? One IFA I spoke to even suggested we 'separate' to make it easier to fulfil, as this would mean my wife could financially disassociate herself from me. In those circumstances, I know I'd be waiving my right to ever have a claim on her assets, but I don't really care as a) we've been through so much together I can't ever see us parting and b) even if we did, I'm not greedy and nor is she - I wouldn't want 'half', especially not as the money we have come intio is from her side of the family.

Thanks