Bad credit, but 25% deposit. Do we stand a chance?

DrOddSpot

My husband and I both have bad credit histories including 2 CCJs. We have paid off the CCJs but still pay back to debt management plans. We each owe £5000.

Husband earns 32000, I earn 15000 (but am on maternity leave until September) plus I receive £10000 in disability and child benefit and child maintenance from am ex partner- can these be counted as income?

The house we want is 175000 and we have a deposit of 25%. We also have a wealthy guarantor.

Due to our credit history and current debt, I'd always thought a mortgage would be impossible, but now we have the deposit, I'm wondering if someone would offer us one.

Any thoughts?

billybear1

I think the obvious and clear solution would be to pay off the CCJ's at 5K each and then look to re amass the amount to 25% which will be enough to get a mortgage with those figures.

I doubt a mortgage company will take you seriously when you have the money to pay off a debt but are looking to take another debt on.

DrOddSpot

Thanks for the reply. Yes, that would be the obvious answer but the 25% is a gift, soley for the purpose of a deposit. We couldn't access it to pay off debts unfortunately. We have paid off the ccj debts, we are now tackling old credit cards and a loan which are being handled by debt management companies. (We have separate accounts.)

billybear1

It is an unfortunate situation but I think that that is the way it will pan out. You can speak to a mortgage advisor, but current market situations will mean your default/CCJ will need to be over two years old and with the repayments to the company will need to pass affordability criteria.

Try calling an adisor!

DrOddSpot

Yes I think I will make an appointment with a mortgage advisor. Both CCJs were paid off 4 years ago now and I have no missed payments since getting on the debt management plan 5 years ago. My husband has missed payments more recently (due to our daughter being born with a life limiting neurodisability, meaning he missed some time at work and therefore wages- things are back on an even keel now).

Any thoughts on having a guarantor? Does that make a difference?

Annisele

Are you certain that you'll be allowed to take on new credit whilst staying on the DMP?

I think that DMPs often (always?) say that, whilst the creditor will accept lower payments than originally agreed, the borrower isn't allowed to take out any new borrowing. I'd check with whoever is managing your DMP before you speak with a mortgage adviser.

DrOddSpot

Good point, Annisele. From what I've seen, the mortgage payments would be lower than our rent now thus allowing us more spare cash to pay towards the DMP. It's a frustrating situation! I guess the best thing would be to get our debts paid off, then look at a mortgage. Unfortunately, that could take us years, all the while knowing that the deposit is sat waiting and we aren't getting any younger to apply for a mortgage. Never mind, was worth asking here for advice as it's given me lots to think about. Thanks