FTB low deposit & DMP

sal22_2

My husband and I have been trying to buy a house on the First Buy Scheme as we have a low deposit but are easily able to afford the mortgage.

I have been on a DMP for 4 years and will have cleared all of my debt in about 3 months and so my disposible income will increase greatly. I have never missed a payment but 2 of my creditors have placed defaults against me 2 years into the agreement and I don't really know why.

We have just been turned down for the first buy mortgage with Halifax as they do not lend to those who have been on a DMP.

I have changed jobs and moved out of london to increase my disposible income and managed my money well since starting the DMP in 2007. I got into debt due to to a low paid job after leaving university (and not really understanding about dealing with finances if I am honest) and living in london stretching my income, along with PPI and interest the debt became uncontrollable and so I begin the DMP. As such I will never let myself get into that situation again but I realise that lenders will not be able to see that.

I have been paying off my debt as I am responsible for it and not not my husband and he has saved the deposit.

We have now lost our house we had reserved and are feeling very low about it all.

Do we have any options? As we have a low deposit £6K we would need quite a lot to afford a mortgage without the the First buy scheme and even them we may be turned down as this is on my record. If we save really hard we would have a bit more but to afford a house in our area we will be looking at about £18K with a 90% mortgage.

Any advise would be very welcome!

Thrugelmir

sal22 wrote: »

I have never missed a payment but 2 of my creditors have placed defaults against me 2 years into the agreement and I don't really know why.

Because they will have suffered financial loss through non recovery of the full amount of the debt. That's called a default. Not merely non-payment of a regular amount.

You may have to wait a period of some years before being in a position to obtain a mortgage from a mainstream lender. As they will want to see you maintain an unblemished credit record.

handytips

25% deposit and you may have a chance but i would say at the moment you would need 35 - 40% deposit, it is normal for some of your creditors to issue defaults as this is often the case with people in a DMP. Sorry for the bad news but you have little chance until the defaults are satisfied and are off you credit file which will take many years, however the market is changing all the time and it may be you will be ok in a year or so. Save hard the better your deposit the more chance you have, lenders do not look at how good you are now but how bad you may have been in the past also.

sal22_2

Thank you for your advice, I thought that this would be the case. Saving every penny from now to to build up deposit. Hopefully the market will change and some lenders will not be so strict in the future.