Mortgage with ( very ) bad credit history

jon_g_3

Hi everyone,

Despite visiting the site pretty frequently I am new to the forums and am interested in anyone's advice and/or experience with a situation similar to mine.

I am currently a home owner with a regular " High Street Mortgage " however due primarily to a bad investment in a property in 2004 - 2006 and some general financial stupidity on my part (whereby I adopted the " head in the sand approach" to handling rising debts ) I am now in the position, unsurprisingly, of having a very bad credit report.
To summarise briefly I am now in a situation whereby I have 3 defaulted credit cards on my report, 2 of which were defaulted in 2008 and one in 2009. Subsequently one became subject to a CCJ ( in excess of £10k) in 2011 which I am now currently paying monthly, one which I am paying via a monthly arrangement with a debt recovery firm and one of which I am not being actively pursued for. As mentioned above I have a mortgage on my current home which is fully up to date, along with a secured loan which I have missed payments on in the past, but which is now up to date and has been so for 18 months now.
The current level of my monthly payments to satisfy all these creditors is now becoming a burden, and whilst I am currently able to meet them I am fearful in the future that this may not be so easy to achieve. Therefore I have put my house on the market and plan to use the equity from the sale to clear my existing debts, the current mortgage and loan in their entirety. The approximate value of all these commitments will be around £110 000, leaving me with something in the region of £40 000 left over. I am considering purchasing a new property with a value of around £92 500 which is not yet constructed and would be available around January 2013. My current mortgage lender has indicated that they would not consider porting my mortgage to the new property.
My question therefore is what are my options? Is any lender likely to consider me if I can prove to them that I can satisfy all my financial commitments upon completion of the sale of my current property and comfortably afford a new mortgage ( which I could )? Failing that, as I am likely to have to move into rented property while the new place is built should I use this time to pay off the commitments in full and seek a mortgage later this year or should I forget the new place altogether and move into rented accommodation for a longer period until my credit history is improved?
Searching the internet for advice, as usual in such situations, throws up so much conflicting advice that it is difficult to see the wood for the trees. I am keen to avoid any type of debt consolidation ( of which there are many ) and there seems to be no adequate resource to find a quality independent mortgage broker that I could speak to, therefore I could really just do with some advice from anyone on here disposed to spend a little of their time giving it to me.
I'll finish by apologising for the long post... if you're still with me at this point thanks for reading it this far!

Dave_Ham

Get everything paid off after sale and the easier to assess opportunity.

There are lenders that will overlook previous issues so long as decent loan to value and obviously the rates are higher...

They key is no mortgage arrears in last 12 months, most will struggle to overlook this issue.

jon_g_3

Thanks for the reply. Just for the benefit of any other readers I have no mortgage arrears since Feb 2006 and the secured loan ( which I guess would count in the same vein ) has been up to date since June 2010. Furthermore there are no missed payments on my mobile phone contract, cable tv or credit card ( via my current bank ).

Dave_Ham

At which point, you will be off high street lenders until 6 years from registration date, although there will be more costly solutions..

Good luck

jon_g_3

Dave_Ham wrote: »

At which point, you will be off high street lenders until 6 years from registration date, although there will be more costly solutions

Sorry, could you clarify what you mean by this?

Dave_Ham

jon_g wrote: »

Sorry, could you clarify what you mean by this?

I mean, after 6 years the defaults and CCJ will come off your credit file and therefore traditional banks will consider you again..

Until then you will have to be non highstreet at higher rates...

Hope this is clearer....

jon_g_3

Yes, I understand what you meant now, thank you.

Thrugelmir

DaveHam has clarified the position with regards to obtaining a mortgage.

Personally I would focus on clearing your debts by wiping the slate clean. Then rebuilding credit history. Initially renting a property. Then moving forward from there. Take one step at a time and don't get ahead of yourself.

jon_g_3

Thrugelmir : So you would suggest paying off the bad credit and renting for a longer term, maybe until the defaults and CCJ drop off the credit history, rather than having them on there and showing as settled ( which from what I understand lenders are still wary of. ) ?

Thrugelmir

jon_g wrote: »

Thrugelmir : So you would suggest paying off the bad credit and renting for a longer term, maybe until the defaults and CCJ drop off the credit history, rather than having them on there and showing as settled ( which from what I understand lenders are still wary of. ) ?

In effect yes.

Lenders will need to see that you've changed your ways. Something only time will show.