Subprime

magnic

Hi all,

Newbie here so please be gentle.

I have a subprime mortgage with Acenden with 20 years left to run - interest only (I know it was probably a silly idea but this is where I am). The mortgage is in my name only.

I have mortgage arrears on my mortgage which I am paying by agreement with Acenden and will be arrear free at the end of the year.

The current value of the house is approx. £210,000 and I owe £180,000. I have a settled CCJ for £418 due to drop off at the end of this month.

I had been using pay day loans until January 2012, so these show as closed accounts and have left a lot of credit searches. I also have two arrangements (one with Vanquis and one with my catalogue) showing as worst status.

My partner has a slightly better credit record (no ccj) but also had used pay day loans.

I earn approx. £28000 and my partner earns £21,000.

The house needs a lot of work (it has been rented out for the past 4 years so I could pay all my debt off get some savings). We are now planning on moving back into the property.

I understand (maybe incorrectly) that we will not get a mortgage for approx 6 years (after arrears and payday loans and searches have dropped off our files). So the plan is to save/get a loan and spend the next 6 years fixing everything that needs doing in the house (not overextending ourselves and getting our credit files into tip top condition).

We are both 47 this year so in six years we will be 53.

Now my questions (sorry for the long post but thought I should give all the relevant background):

1 Do you think we are thinking on the right lines or should we be doing something else to improve our situation.

2 What is the likelihood of even getting a mortgage at age 53.

Thanks in advance for all your advice and once again sorry!!!!

maninthestreet

With a joint income of almost £50k why the hell are you having to borrow so much money?? I suggest you go onto the Debt Free Wannabe board, post you statement of affairs (list of monthly income/outgoings, your savings any debts) and ask for advice.

magnic

Thanks for the reply Mr Man

I have to say you are quite right. It is only by constantly going to the debt free wannabee that we are now seeing a slight light at the end of the tunnel. We were both seriously in debt/overstreching ourselves/living beyond our means. Won't bore you with details suffice to say lesson learnt.

The advice recieved and followed has got to here, all debt repaid (apart from mortgage) and credit files cleaned up. It might not seem much to some but we have really learnt our lesson and now are living within our means and budgeting. This is now a way of life for us (albeit twenty years after it should have been).

I was really looking for some advice regarding going forward for our housing situation.

Thanks

The_J

Dave Ham will be able to give you the breakdown on whether the mortgage is possible. Credit searches and payday loans aren't a real problem.

harvey115

I was under the impression that pay day loans are seen a bit negatively by mortgage lenders...

magnic

Harvey,

That too was my understanding, hence the spend six years doing up the property and then look at getting away from sub prime/interest only.

bigadaj

With your credit problems then presumably you haven't got a repayment vehicle in place, so whilst you may have twenty years nominally left on your mortgage then in twenty years time you will still have the original debt.

The multiplier on salaries isnt too bad, but if the whole debt is still there at fifty three years of age then a repayment mortgage may prove very expensive if the term is then only say fifteen years.

Thrugelmir

Once you've cleared your unsecured debts. You need to repaying capital off the mortgage.

Suggest you try and save up to do the work on the property. Rather than borrow again.

magnic

Thanks for the replies.

I think we are going to do the work as we go along and try to overpay for the next six years, then hopefully remortgage away from 'sub prime'.

Conrad

I'm afraid there is zero c hance of another lender taking you on.

You'd need something like 40% equity and even then it would be difficult as lenders would have a hard time demonstrating a responsible lending case given your difficulties.

The difficulty I forsee with you is that you will carry on being over indebted and never get out of the hole. I'm not being negative, just what I think could be the case based on my 20 years in the business.

Have you considered going Bankcrupt? The court may allow you to retain the house and equity. People often mistakenly think bankcruptcy is a big no no but they fail to account for people like you that could end up in another 15 years of bad debt, whereas bankcruptcy would set you back to square one now and you can start rebuilding your credit file immeditaly.

Wh05apk

Conrad wrote: »

I'm afraid there is zero c hance of another lender taking you on.

You'd need something like 40% equity and even then it would be difficult as lenders would have a hard time demonstrating a responsible lending case given your difficulties.

The difficulty I forsee with you is that you will carry on being over indebted and never get out of the hole. I'm not being negative, just what I think could be the case based on my 20 years in the business.

Have you considered going Bankcrupt? The court may allow you to retain the house and equity. People often mistakenly think bankcruptcy is a big no no but they fail to account for people like you that could end up in another 15 years of bad debt, whereas bankcruptcy would set you back to square one now and you can start rebuilding your credit file immeditaly.

some strange advice, what would they gain from bankruptcy? they have equity in the property, and although there is no indication of the amount of other debt, it sounds like it is being cleared. Basically in todays climate, bankruptcy will effectively prevent them getting a "decent" mortgage for a long long time - if ever, unless they can build up a large deposit.

Their income certainly seems sufficient, if they can sort themselves out, and then do something in a couple of years time, once the worst of their credit issues drop off.