Mortgage advice needed please

Bargie

Hello,
I'll try and keep this short. We are trying to sell our house to move somewhere bigger.

I was in a DMP which I left having settled all my debts in Jan of this year. As a result I had a number of defaults which are registered for 2007 (2 debts) and 2008 (3 debts). All now satisfied.

I have had a mortgage for 5 years which has never been in arrears. All my other accounts (phone, bank) are satisfactory. We have £45k equity in house which will leave us £40k after estate agent fees, solicitors and stamp duty on new property (this is on assumption the lowest amount we would accept for our house, big if but if we got asking price it would be closer to 55k deposit).

I earn £30k and my husband £18k. Properties we are looking at are about £150- 170k so we'd be looking to borrow about £110-130k.
Do any of the brokers here think this is possible with a reasonable interest rate? Or would we be better off renting for a year (assuming our house sells in the mean time) and applying next year when my credit file will be completely clean?
Husband's credit file is ok - some late payments on a CC about 4 years ago (that card paid off and closed 12 months ago). No defaults and no outstanding debt at all.

Thanks for any advice

Thrugelmir

You'd be better to stay in situ and continue to pay your existing mortgage down. As the DMP will impact on your credit record for some considerable time. Certainly longer than a year.

Far better to pay your own mortgage down rather than pay rent to someone else to pay theirs.

Dave_Ham

Broker/lender selection is crucial, but based upon the information provided this will be achievable on fair rates.

Good luck

Bargie

Thanks - can you say why the DMP will impact me for more than a year. I understood it that defaults would come off credit file after six years and that as accounts are all now closed and paid they would just disappear off my records once the 6 years is up (so within next 12 months). Is it the case that the accounts still show? Thanks if you can clear that up for me

Simon_gloster

6 years from default settlement date.

Bargie

Simon_gloster wrote: »

6 years from default settlement date.

Really?? I thought 6 years from date it was 'awarded'. Oh dear, that rather puts a spanner in the works then

Thrugelmir

Bargie wrote: »

Thanks - can you say why the DMP will impact me for more than a year. I understood it that defaults would come off credit file after six years and that as accounts are all now closed and paid they would just disappear off my records once the 6 years is up (so within next 12 months). Is it the case that the accounts still show? Thanks if you can clear that up for me

Your credit history will record all the months that your accounts were in arrears. Up to 72 months worth. That's what lenders will score you on.

Many people view a DMP as an interest free loan. The downside is that credit history is impaired for longer. So settling the defaulted accounts as quickly as possibly is a must.

A default is non payment of a contractual agreement to terms. Not just when a default notice is issued.

Bargie

Thanks so just to clarify, These accounts will show for another 6 years on my file (as I only cleared the final balances in Jan this year). Is this always the case or just those that have had arrears? I have had other accounts in the past which were closed 4 years ago and they don't show anywhere on any of my credit files. Is that because they were kept up to date?? And presumably as Simon Gloster said they will also show the default for a further 6 years - making a total of 12 years of being screwed by a silly (and expensive) youthful mistake! Blimey that is depressing.
Obviously I accept the debts I had and have worked hard to pay them off. I really thought once they were paid and the defaults had passed 6 years the accounts would no longer show. Guess better shelve the moving house idea

Thrugelmir

Financial institutions report their data to one credit agency. When you make an application for a product where a credit report is required. The agency used by the lender for processing the application will update the records with those held by other agencies. So at given point of time not all records are the same.

lufc7

This is all incorrect OP is right that the defaults fall off their CRA files from the default date. What has been suggested about files in arrears will show for 6 years after the accounts are closed but only if they were never defaulted. Hope that make it clearer to the OP

Dave_Ham

Default stays on for 6 years from inception, so after 6 years they come off but the AP/DMP marker will be on there for the 6 from settlement.

That said, just to confirm this mortgage is achievable. Do not overthink this or worry, you need a decent broker and they will manage this for you.

Good luck