FTB, low income, high deposit and mediocre credit score, cant get mortgage. Help!

Meggymooo

We are in a bit of a pickle.
We have been left 65k by my husbands late grandmother and want to buy a house. The house we want to buy is 100K and a 3 bed semi. I have no income as I look after the kids, and my husband has a low income of roughly 700pcm. We get child tax credits of 111 per week and orking tax credits of 40 a week. Which gives us an income of about 1350 pcm. We know alot of lenders wont accept tax credits as income though.
We approached a mortgage advisor and she hasnt been able to get us a mortgage with anyone, they have all come back that our credit scores are too low.
Mine is 614 and my hubbys is 590. I think mine is lack of credit, but my husband has a few old late payment marks on his. There are a few things he is disputing on his too. He has also paid off a flexi-loan he had with HSBC for 1500 but they havent updated his equifax or experian yet. We have no other unpaid debt.

We currently live in a rented council flat and recieve a small amount of housing benefit, we are due to have the inheritance money paid in to our account next friday when we complete on the house that was left to us, and we are really worried that once we have got the money in our bank we are going to lose all of our tax credits etc, and will basically living off of the inhertiance. Which is such a waste, as that will go quickly :-( Is there anything more that we can do to help the situation, and does anyone know at what point you lose your tax credits?

ACG

Go and see another broker. With a 65% deposit, i would be surprised if you couldnt get a mortgage based on the bad credit.

When were the debts registered on the credit reports?
What do they show as on your credit report?
How old are the children?

Dave_Ham

Sorry cannot help on the tax credit front, although would expect you to be able to obtain a mortgage based upon the information provided.

I would suggest that you get your Experian, Equifax and Call Credit reports though as they will be crucial.

Meggymooo

The most recent one registered was about 3 years ago now. We saw someone from countrywide (in bairstow eves) if that helps. apparently all of the mainstreet ones wouldnt deal with us, and she went to someone called marstons (sp?) and they looked at the entire case and said no due to adverse payment history, but the last late payment was 2.5 yrs ago now.

Meggymooo

We are 23 and 25, and our children are 18months and 7yrs. We have got copies of our equifax and experian reports but cant see much on them other than a few late payments a few years ago from my husband and a settled debt to next from 5 years ago.

LeafGreen

Meggymooo wrote: »

and will basically living off of the inhertiance. Which is such a waste

I have to say I don't consider living to be a waste of money!

Joking aside, do you think you might be able to get something for a bit less than £100K? Are you actively chasing up the updates to credit files, your prospects may improve once that has been done. Perhaps a 90K house with an updated credit file might stand a better chance?

Meggymooo

I know what you mean with the living lol!

Unfortunately where we live it is un likely that we would get a 3 bed house for anything less. This one isnt in the best condition and is in a bad area but has a little potential. We dont really want to move to a 2 bed as we dont think it would be fair on our eldest as our 18mnth old has some health issues which means she is up half the night

Dave_Ham

Get these reports to a different mortgage broker to look through. Dependent upon the details recorded, they shoud be able to tell you if it is achievable within 30 minutes to an hour

john1002

Dont forget to inform all your benefit providers that you ahve this inheritence as soon as you get it in the bank, otherwise you risk overpayments and potential trouble for not informing of change of circumstances. With that equity you will loose all income/means tested benefits. So tax credits, housing benefit and any council tax benefit you may have got.

john

EDIT: Hopefully someone can inform as well over the capital rules with regard tax credits as by using the inheritence to buy a house it could be deemed as deprivation of capital (fraud). So you may not be able to use tax credits as an income source.

Upsidedown_Bear

Capital is not normally taken into account when deciding entitlement to tax credits.

See page 22 here, dated March 2013.

http://www.hmrc.gov.uk/leaflets/wtc2.pdf

kingstreet

Meggymooo wrote: »

The most recent one registered was about 3 years ago now. We saw someone from countrywide (in bairstow eves) if that helps. apparently all of the mainstreet ones wouldnt deal with us, and she went to someone called marstons (sp?) and they looked at the entire case and said no due to adverse payment history, but the last late payment was 2.5 yrs ago now.

Countrywide advisers have only a limited panel, they do not offer whole market advice. They also charge you a fee, sell their single-tie insurance and will be anxious for you to sue their conveyancing service, for which they get a referral fee.

Find yourself a good, independent or whole market broker and put in their hands all three credit files (the two you have and the other) you can obtain here;-

CallCredit

https://www.callcredit.co.uk/stat-report-online/index.php?action=basket_add&tpl=setRegister&package=63&amount=1&mode=clear

and don't pay for the meaningless "scores" they give you. Chances are, your best bet will be a non-scoring lender like a smaller, local building society.