Mortgage hopeful

Glennn

Ok here are the figures and facts, would just like to know if I am being realistic or should we wait etc.... This is where we should be by the end of 2012

Joint earnings - £38k (might go up but not counting on it)
Deposit - !0k (budgeted but we don't have this yet)
House Price - 80-100k

OH History - No late payments, has had credit cards/loans in the past paid them fine. Does currently have 5k on a credit card. Credit has been withdrawn but has never missed a payment. Not sure how this is viewed by lenders? Should be down to 2.5k by 2012.

Then me....... Well where do I start.... had a default but dropped off 2 years ago so think that is fine. Here is my other debts...

Capital One - £900. Not missed a payment this year and will be the same in 2012 now it goes by DD. But I do have 5 missed/late payments from 2009/10

Santander - one missed payment this year (2011), one last year (2010). This is my current account so only thing I can think of is I went into unauthorised overdraft.

Vodafone - Had an issue with them, three missed payments up to Oct and settled in November. End of contract so I have now cancelled.

Catalouge - One missed payment from Jan 11, otherwise fine for two years. Balance of £100 which will be clear when going for a mortgage.

Natwest - Have an overdraft of £1200 with these, currently at £1100 and paying it off last as lowest interest. I have two late payments with these in 2011, again must of been over overdraft limit.

Vanquis - 2 late payments in 2011 and 5 in 2010. balance of 1.5k of a 2.5k limit. Paying off first at the moment so will be cleared in 3-4 months (paying £500/month)

Other than that I also have about 4-5 max late payments from 2010 that relate to closed accounts. So as you can see 2011 has been my first year where I am not completely reckless with money. Now paying everything by DD and overpaying. 3.5k is my total debt but by the end of 2012 I hope to just have the Natwest overdraft to pay of 1k or so.

Now assuming we meet those figures and have a perfect 2012 can I realistically go for a mortgage by the end of next year? I know this isn't a simple yes or no but just looking for advice/tips. Also we have both moved in with family and paying £250 board a month to enable us to save.

Glennn

Just realised this should be over on the house buying forum really.

Sorry

Wh05apk

At the moment 90% LTV mortgages are very difficult to get, what they will be like next year, who knows? Currently any missed payments and you will probably not get 90%, by next year if you have been clear for 12 months, some lenders "may" consider you, if you can scrape 15% deposit, then you will stand more chance.

originalmiscellany

You also have quite a few late payments here and there, which in the current climate are going to be "flagged up" and to quote popular parlance, people will drop it like it's hot, if you have shown you can't keep consistently on top of your debts. As Wh05apk said, mortgages are hard to get and anything that's not squeeky clean you will struggle - however I have read your post, and would like to think that in a years time, you could be in a much better position.
Aim for 20% savings (you'll be fortunate as house prices are dropping!) and clear all your debts on cards, and at the same time show that you can borrow on credit cards and pay off in full every month, such as putting petrol on a CC and pay off in full every month.

JimmyTheWig

Didn't quite follow all those figures and missed payments, OP.
Are you saying that by the time you come to apply for a mortgage you'll be debt-free and have a £10k deposit?
Or will some of the debts still be there? If some of the debts will still be outstanding then I don't think you've got much hope. If you're debt free then it might be possible.

Glennn

Sorry about the confusion with the figures, I was still in sleep mode so probably didn't word it the best I could.

Debt will hopefully be all gone but budgetting for half of it to be gone to be on the safe side. Between us this will mean about 4k left and will mean us having 10k deposit.

JimmyTheWig

I would have thought that with that history you'd need to be debt-free before applying for a mortgage. Don't know, though.

Glennn

Ok may have to put plans back a bit then..... I can have all the debt paid off will just have a smaller deposit which will then hold me back too

KingElvis

I think that mass of late payments would knock it on the head for you.

JimmyTheWig

Generally it is best to pay off all debts before you start saving for something like this. Seems a little silly to pay hefty interest on debts whilst earning pittance interest on savings.

But you do need to consider (a) if you need an emergency fund of savings and (b) if you are more likely to be motivated to put money into a deposit savings account than you would be to pay it off savings.

Thrugelmir

Glennn wrote: »

Ok may have to put plans back a bit then.....

I would go for clearing the debts totally and maintaining a clean credit profile.

That will provide a potential lender with evidence that you changed your ways.