New Members, Wanting A New House And New Start In Life

Ian&Kel

Hi everyone,

This is our first post and I wondered if you could help out a few mortgage and debt idiots!

After a business start up never really caught on and our combined idiotic spending we are seriously in debt! As follows :eek:

Mortgage £29 000

Capital One CC £3900
HSBC CC £5631
EGG CC £3000

Halifax Secured Loan £20 000
Halifax Secured Loan £15 000

Higher Purchase Kitchen £2000

Outstanding Electric Bill £3000!!! Why they never increased the DD is beyond me!

OD's for both of us total £1800

So this adds up to about 90 grands worth of debt once early pay off is taken care of :eek: :eek: . This is the first time we have really written this down and looked at it. Pretty shocking how we have done this really in years past. The thing is now we don't really abuse the cards and loans and we have finished a pretty run down house. So we are looking at moving house and having a complete new start. New house, cut up credit cards and have no debt except a mortgage. Never to get in it again. Trust us we are done with other forms of borrowed money, any form if we could help it. But we need a home and a mortgage is the only answer.

The thing is we don't really know where to start! We are going to put the house up for sale in the next couple of months. And we will be looking for one a little larger and to the tune of £150k. We just don't know where to begin.

Well the slightly better news. The current house has an estimated value of £100k which means we have built up, by complete restoration, a nice 70k profit in equity. I believe this should be just about enough to clear all the debts and hopefully leave around £10k to place down as a deposit on the next house. Hopefully with a bit of saving closer to 10% of the next houses value.

This will feel so nice to have just one relatively sensible sized mortgage. So much less stress and worry for the pair of us.

Our combined salary is approx £40k, although I have only been in my current job for the last 3 months. The entire mortgage and current house is only in my name.

Does this all sound possible for us and how do we go about doing it? Do you find a deal/company that has a suitable rate and plan to suit. Then approach them and show them all the incomings and outgoings? I mean we don't understand where to start in it all! Sorry for sounding like a complete pair of donkeys but are ignorance is genuine! I guess first thing first put the current house up for sale. Do you then find the best mortgage deal but how to approach them!? We would have to say we currently can't afford the mortgage but will be debt free once the house is sold and paid for. Do they base all their calculations on future finacial state i.e once the current house has sold!?

And as soon as the house is up for sale is this the time to be viewing and even making offers on the next!? As there is a couple on a very desirable street for us at present!

Thanks for any input from anyone with slightly more knowledge than us in the matter!

UK007BullDog

Well the first things to do are:

1. Pull a credit record of yourself and partner from Equifax or Experian. One of them offers a good deal i.e. free 30 days.

2. Then you go to the debt wanna be free board on this site and post there as well what you posted here.

3. Go and find a fees free broker. There is no point looking before you have not found out. When asking for a decision in principle they will take all your debt in account, so the broker will have to let them know you want to spend all your sale money on your debt repayment. If there is no deposit left you might have to look at a 100% mortgage or more if the house does not sell for the amount you thought to use the new lenders money to pay off the rest of the debts. That way they will lend you more than if you carry the debts with you.

4. They will look at all your debts and incomings. and then be able to tell you in regards to your credit record which lender will lend you money to buy the bigger house.

5. Get your house surveyed by at least 3 if not more estate agents and put it on the market ASAP. If you are struggling now with payments what will happen in a couple of months. Unless you have not yet defaulted on any of your loan payments you want to make sure it does not happen. A house sale can take 2 - 5 months if your buyer is encountering problems or if you enter a chain it could take even longer. Can you hold on that long?

6. Don't forget associated costs of selling and buying a home. You will have 2 lots of solicitor fees (best to choose one who will do both sale and purchase for you as it might work out cheaper). Stamp duty, old lenders fees for stopping mortgage, moving costs, new lenders fees, survey (the lender might be able to help with the latter two if money is tight).

HTH

herbiesjp

Hi there and welcome to the board

Are you up to date on all your debt payments? No missed payments, defaults or CCJs?

I think it has been very brave of you both to look at addressing your debt situation, and well done for doing so.

What i think your first port of call should be, is a fee free whole of market adviser. By going to see an adviser, yu will be able to look at the figures and see whether your plans are actually feasible in terms of what you plan to do.

I would then suggest getting an agreement in principle via the adviser for the scheme and amount of mortgage that looks best for you, just to make sure that based on all the accurate information you have given, a lender will be happy to proceed with the mortgage for you

Based on your incomes, and the fact there will no longer be any debt, you should be ok on the mortgage front - have you both got a copy of your credit files to make sure there are no nasty surprises on there?

Once the agreement in principle comes back as OK, I would say that you can look at outting your house on the market and start looking at new properties and putting offers in.

The probationary period, if indeed you are in one as you have been there only 3 months, may cause a problem with some lenders. However there are plenty that will be ok depending on your exact circumstances.

Self discipline is the key here - no point in doing this if you are just going to build up the debts again. Be as confident as you sound, and make this a definte clean slate for both of you

HTH

Ian&Kel

Thank you very much for the replies.

We kind of guessed we would be able to afford the mortgage as our combined salarys, given a 4x mortgage, do cover the entire 100% cost of the house we want. The problem is the fact that all the debt currently means that we couldn't afford any other serious expense at all. But the situation obviously will be much better because of house equity. It will probably work out being like a first time buyer in the end. No equity to bring with us but no debt either. My debt calculations are a little over estimated as well as I am not 100% what the fees are for early mortgage and loan payoff. All with the Halifax. I guessed at £3000 for each and I am sure it shall be less when it comes to it. The last remortgage was around a year ago so the first redemption band should be skipped at least. The loans haven't been running long at all so the actual payoff figure may just be slightly larger than the actual amount, not £3k over like I have guessed. I prefer over guessing so I am surprised in a good way when the real figures come in!

The house should sell for the 100k I think. Next door is currently up for sale, all terraced houses. This is on for 99 750, obviously they will take offers possibly to 95k. But this is a single bedroom and ours has two. We are also the end terraced which I believe usually sells for more. We also have a brand new kitchen I am currently on holiday finishing. And other little extras like solid oak flooring. So I think we should get a final price of 100 if next door sells. The problem being two terraced houses up for sale at the same time could look suspicous to some!

I will certainly look into the credit scores thanks. I am not sure what our credit scores are like. We can stil happily get HP and interest free things. I don't recall any missed payments but going back 6 years as they do there probably are some. More reminders and genuine mistakes than failing to find the cash. Definitely no court letters or anything. I agree it is wise to check these however.

UK007Bulldog, money isn't particularly tight. We certainly aren't flush but we still have approx £400 a month as free cash. We can certainly survive for however long. We are currently chipping away at CC's whenever possible. It's just the house move would almost double the amount of money we have to spend. As the payments will be lower than loads of loans and CC's. We do realise putting this whole load of debt on a 25-30 year mortgage means that we will seriously pay in interest. But the equity is good fortune for us, we are only mid-late twenties. It is only like having to buy your first house at todays money. So it will be, like you say, a clean slate. We have been stupid and shall not make the same mistake twice.

I am also thinking of a 15 year fixed mortgage as possible as I can't see the base rate going down that much in 15 years.

Rick62

Some good advice from UK007 and herbie, all I would add is you may want to consider remortgaging now, rather than waiting to sell. Partly depending how keen you are to move and how long it might take.

By remortgaging now you could immediately relief some of the stress and get your finances under control and then when you do move you are doing so purely for the better house not to solve your financial problems.

Ian&Kel

Cheers Rick,

We are moving soley for the sake of the house, else we would just remortage. It just kills two birds with one stone. Plus if we did remortgage now, to get that sort of money I would have to add my OH to the mortgage in order to release that amount of funds. We would also need a remortgage which would allow us out with no redemption fee as it would again cost to move. In this case it may just over complicate things. We are eager to move as soon as humanly possible. We have been looking at houses over the last few months and it seems January has brought the best location ones for us. May pass us by in the time it takes to get everything sorted but we will try!

I have taken a week off to try and finish off the house. Just minor little things to do now. Including repainting a lot of things. Hope to have it up for sale towards the end of the month. It may be slightly later.

For now I think I will try for the credit checks on both our parts and then find a WoM advisor and see what is said.

Ian&Kel

Sorry for us hassling you, maybe we can return the favour to other newbies one day but.....

Could the same sort of thing be done directly with a bank. I realise for instance that getting a broker and finding the best deals may well be in our best interest. But a lot of the other banks or building societies for instance do seem to offer deals that seem very competitive nowadays. For instance the YBS has a 10 year fixed on offer with a rate of 5.09%. I think that is pretty good as our financial plight should well be improved in ten years time due to promotion. Enough anyway to take on the then increased, i'm sure, rate. And also increased equity in the house hopefully.

Would the same idea still work with a bank if we went in armed with credit records, itemised accurate debts and estimated house selling price. Would they preliminarily accept a mortgage based on the debts being removed using house equity?

UK007BullDog

You can do both, however each time a bank checks your credit record it leaves a footprint. Too many of those and your credit record is shot to pieces and none will then lend. I would only try the one you are currently banking with and maybe one other which has a good rate. Otherwise look for a broker.

Ian&Kel

Thanks,

I just don't really want to stay with the Halifax, the service at times seems to have been shocking. Always new staff that never seem to be sure what they are doing! It is probably just my local branch but it has annoyed me!

So that leaves the one I find with a good rate. However just asking if this is possible they would do a credit check that leaves a footprint? I can then accept the mortgage and get the ball rolling, should everything be good? Even though I do not have an exact house in mind nor have I sold mine? Or can they then give you a reference number and you return when things have progressed. I know the amount I want to borrow and I know +/- a couple of grand what my house will sell for. I know the budget for my house and any money left should a 150k house have a smaller offer accepted can easily be used for conservatory/furniture etc..