Barclays Springboard Mortgage ... Advice!

Startfresh

Hi All,

First post here and it's a long one so hoping you can bear with me ...
My husband was previously married and left his last relationship with a significant amount of debt. £25,000 to be exact! This currently cost us over £600 a month in repayments. I had a few thousand pounds left over from debt that we've been working hard to pay off. We started paying mine off first to reduce monthly outgoings in the quickest way possible and we're already in a much better position than we were, but as it currently stands, there is still £23,000 left to pay off. (This is painful writing it down!)

My husband earns £24000 a year and I earn £19000. We are lucky enough to live in a house that is owned by my parents, and have for the last year been allowed not to pay rent in order to help us reduce our debt. Our financial plan has been to continue paying our debt off until it's all gone, then to one day, eventually, be able to get ourselves a mortgage.

One of the problems is that my husband is 38, and I am 26. The concern I have is that the longer we wait to get a mortgage, the older he will be and the less likely we will be able to get a 25 year mortgage.

We have recently been offered a lifeline from my parents that will make a huge difference to us. My parents have a mortgage to cover the house they live in and the house we live in, a total mortgage of £150,000. They have not been paying this off since purchasing the house (it's part of a business loan they have) but when my stepdad retires (probably end of 2014) they will need to begin to pay this mortgage which they don't want to do. So, they want to sell the house to us before he retires. Our house is probably worth about £170-180,000, but they are willing to sell it to us for what they paid, which is £150,000. (Using the Barclays mortgage calculator, it looks like they would lend us £151,000. Not sure if that makes a difference at all in making the bank happier with what they lend us.)

Obviously, we would LOVE to do this, but have no hope in hell of possibly achieving it while still in debt and without a deposit. So, they have offered to loan us £30,000 as a deposit to pay secure a mortgage of £150,000.

BUT - despite the deposit, we still have no hope of getting a mortgage if we still have £20,000 in debt.

Another BUT is that I'm pregnant, and will be due to be on Maternity leave in August. (I probably will be going back to work full time and will have free child care so it won't cost us any extra) But in an ideal world I'd like to get our mortgage sorted before my wage goes down for a year and before we have to declare any dependents.

SO - having investigated and calculated all options, this is what I think we could do ...

Option one - borrow a total of £45,500 from my parents (I haven't mentioned this much to them yet!) - borrow £23000 now, spend the rest of April, May, June and July paying off any remaining debt and trying to improve our credit rating (doesn't give us long). Then in July/August, borrow another £7500 for our 5% of the deposit and apply with another £15000 of their money for the Barclays Springboard Mortgage (which they get back from Barclays after 3 years) Based on these figures our mortgage would be £890 a month which would leave us with £1280 disposable income a month after the mortgage and bills. When I'm back at work next year, pay my parents the remaining £30000 borrowed over 5 years at £500 a month, leaving us £780 disposable income a month.

Option two - borrow £23000 now, spend April, May, June, July paying off remaining debt then from August - April 14 save £800 a month to get the 5%, £7500 deposit required. Also spend this year making our credit rating immaculate. Then in April next year apply for the Springboard mortgage along with another £15000 from my parents (which they get back from Barclays after 3 years) If approved, get the mortgage then pay my parents back the remaining £23000 borrowed at £380 a month over 5 years, leaving us £900 disposable income a month.

Both options have pros and cons but I'm not sure what is best to go for ... I am under the opinion that if there is anything negative in either of our credit history (not the physical amount of debt, just late/missed payments etc - haven't got copies yet, applying for them this week) that we would be best off giving ourselves a year to improve our rating. But then, would we be best of applying without having to declare any children yet?!!

Another thing to query is, could we apply for the mortgage this August, then if we get refused, apply again next year once we've improved our rating etc? Or will the refusal of a mortgage on our account cause us more problems in applying again?

Sorry for the incredibly long post, I'd just really appreciate it if any of you out there with more knowledge and experience than me could help offer your wisdom!

Many thanks for allyour help.