Where to go from here? :(

Danniella

Long story so I'll break it down - hopefully someone will be able to give some advice, many thanks in advance.

Currently own property with probably about £10-£15k equity in it. Have seen a bigger property we would like to buy but my husband is self-employed (9 years) and I have only just started back to work after a 2 year break. Ps, I have been back into work 4 months.

Taking everything into consideration, we decided that a broker was our best option.

Husband's credit history is clear. Mine however is not so clear. There is a credit card default on there (spoke to credit card company 2 years ago when I was being made redundant to ask for interest only period, they agreed for 3 months and then I asked for extension to 6 months, they also agreed and then issued a default notice).

Broker has come back to say that my credit check failed with the high street lender he was looking at. My husband's credit check was fine. The problem I think we would have is my husband's self-employed earnings would not be enough to secure the property we have seen.

I have spoken to the credit card company concerned to ask what the minimum payment is on my account so that I can at least pay that. Their answer is there is no minimum payment since the account was passed over to their in-house collections department when the default was issued.

My question is should we just give up, pay off the card and then wait 6 years for the default to drop off? I am a very patient person and don't usually mind waiting for things but we are in a 2 up 2 down terraced property with 3 children (we have however converted the loft) - yes, the nearly 3 year old is still in with me and my husband!.

I wonder whether to privately rent, that is also another idea I have considered in order to give us the space we need quicker.

Any ideas/tips/advice would be greatly appreciated.

ACG

You dont say how much the purchase price is, but with a 10% deposit your going to struggle, anything 15% plus there may be options available, if your broker cant find anything maybe look for another broker...possibly one that specialises in adverse?

Thrugelmir

Clear the credit card debt.

Overpay your mortgage to increase the amount of equity you have. As the lower the LTV on the next property the easier finding a mortgage will be.

Danniella

Thanks for your replies. I do appreciate it.

Sorry - purchase price of new property £120K.

We went with the current broker due to the self-employment and the fact that I had only just returned to work issues. Turns out, none of these issues are a problem. I am due to have a discussion with the current mortgage broker tomorrow to discuss the way forward so I will ask about the 'adverse credit' mortgages.

Many thanks for your advice.

ACG

I think the problem will be the size of the deposit. There wont be any 90% adverse lenders - none im aware of anyway.

You may not need an adverse lender but i think you will need a 15% deposit.

Dave_Ham

As stated, 15% deposit and these issues are likely to be able to be resolved.

Alternatively, feel free to list your OH self employed income for last 3 years and indicatively we can give you a feel for maximum borrowing potential.

Danniella

Thank you for your advice. For information, husband's self employment earnings are approximately 28K for this year once the books are done in July, last year 23K and year before roughly the same. Doesn't look good, does it?

Danniella

Dave Ham - can I please just check something? Are you saying that if we had 15% deposit, the issue of my default wouldn't be an issue? Many thanks for your help so far

Simon_gloster

Depends on the lender Danielle. I have seen this week 59% LTV mortgages declined on credit score from one missed credit card statement. Not saying this is the reason for the decline but gives you an idea of the sort of things your up against in the market place.

Lender dependant..............final answer.

ACG

With a 15% deposit and the age of the default, there are lenders who will ignore it.