Long term advice please.

Ozzy1968

Hi, very new to the site, so much info on here, hope this is the right place? To keep it short, if I can . We are currently in a position in which we owe a lot of money with no real light at the end of the tunnel. We have had ill heath, redundancy, and poor money management over a period of time and we have had enough.We are on a DMP with Step but is going to take along time to pay off.

We are going for a fresh start and have put our house on the market. We owe £230,000 and its up for £265,000 so hope to come out with around £30k. We have spoken to Step re making offers to clear our creditors and they have been very helpful and they are confident we can clear them because of the age of the debts.

Once all the debts are paid, my parents have offered to give us the money to put down as a deposit on an affordable home. I have spoken to a Broker and unsurprisingly we would have no chance of getting a new mortgage at the moment because we have had arrears in the past 12 months on the current mortgage and our credit score is very poor. Ha has advised we rent for year, after this time the arrears are no longer a problem in a new lenders eyes. We also need to clear the DMP as we have said we will do. We then to to do what we can to improve our credit history.

My question is, has anyone experience in this or have any advice. What are our chances of getting a mortgage? Other factors which may help, been with my bank for over 20 years, good employment history, wife is currently looking for work after being ill, nice deposit, around £50k. Want to get back in the ladder as quick as I can, not getting any younger, 43.

Woooo, said I was going to keep it short, sorry:rotfl: Hope someone has some views? Many thanks.

manzanilla

I agree that it sounds as though you should sell the house and clear yuour debts.

But clearing your debts through making Full & Final settlement offers will NOT give you a good credit record. It has to be done as it sounds as though you have no real alternative.

nb you havent said how much you owe. If you owe 50k+, then a F&F is raelly the best way forward. If you only own say 40k, you could consider paying off in full your debts which are at the highest interest rate and resuming normal payments on the remaining 10k. This will improve your credit record a lot more.

Being with your bank for 20+ years is I am afraid irrelevant.

The sooner your wife manages to get a job, the better your situation will be, but no mortgage lender is going to give much weight to a new job for at least 6 months, probably 12.

Is there any chance of your parents guaranteeing your mortgage?

amnblog

If you are looking at affordable housing deals such as shared ownership or shared equity I am afraid the mortgage lenders do not like advice of the type you describe.

A default or two they can deal with, but debt management plans and mortgage arrears are a no no.

I suspect you will have to wait for your credit history to level out and this could mean two or more years.

Ozzy1968

amnblog wrote: »

If you are looking at affordable housing deals such as shared ownership or shared equity I am afraid the mortgage lenders do not like advice of the type you describe.

A default or two they can deal with, but debt management plans and mortgage arrears are a no no.

I suspect you will have to wait for your credit history to level out and this could mean two or more years.

Thanks for your reply, sorry, when I said affordable housing, I meant I respect of what we could afford, eg, purchase price £170,000 and putting down £50,000 deposit thus having an affordable mortgage. Can you still have a guarantor on a mortgage which my parents would happily do for us?

Ozzy1968

manzanilla wrote: »

I agree that it sounds as though you should sell the house and clear yuour debts.

But clearing your debts through making Full & Final settlement offers will NOT give you a good credit record. It has to be done as it sounds as though you have no real alternative.

nb you havent said how much you owe. If you owe 50k+, then a F&F is raelly the best way forward. If you only own say 40k, you could consider paying off in full your debts which are at the highest interest rate and resuming normal payments on the remaining 10k. This will improve your credit record a lot more.

Being with your bank for 20+ years is I am afraid irrelevant.

The sooner your wife manages to get a job, the better your situation will be, but no mortgage lender is going to give much weight to a new job for at least 6 months, probably 12.

Is there any chance of your parents guaranteeing your mortgage?

Thank you you for your reply. Yes my parents would happily guarantee the mortgage? Would this improve our chances?

manzanilla

Can you still have a guarantor on a mortgage which my parents would happily do for us?

Yes of course you can. A guarantor means the lender is going to look at their credit rating, not yours....

Of course you do need to ask yourself if your nice parents are in a good position to do this. Because you will be putting THEIR future at risk if you run into trouble. One of you loses a job, your wife gets too sick too work and you need to be at home and look after her etc etc.

Lots of bad things can happen in life, when it's you then you need to think about them and decide if you are comfortable with the risk. But think long and hard about putting your parents at risk....

notanewuser

You're extremely unlikely to sell for more than £250k because of stamp duty increasing at that level. Nobody buys a house for £260k because it will cost an additional £5,300 in stamp duty.

Ozzy1968

notanewuser wrote: »

You're extremely unlikely to sell for more than £250k because of stamp duty increasing at that level. Nobody buys a house for £260k because it will cost an additional £5,300 in stamp duty.

Thanks for your comments, fully aware of the stamp duty, so your saying nobody sells a house over £250k now? I appreciate it limits your market but we have already had interest, we will see. That's what the 3 valuations came in at as an average. Lets hope they are right. Cheers.

R_P_W

Ozzy1968 wrote: »

Thanks for your comments, fully aware of the stamp duty, so your saying nobody sells a house over £250k now? I appreciate it limits your market but we have already had interest, we will see. That's what the 3 valuations came in at as an average. Lets hope they are right. Cheers.

Of course people sell and buy houses for more than £250k, but anywhere between 250 and 270 is going to be tough unless it is a real bargain at that price.

notanewuser

Ozzy1968 wrote: »

Thanks for your comments, fully aware of the stamp duty, so your saying nobody sells a house over £250k now? I appreciate it limits your market but we have already had interest, we will see. That's what the 3 valuations came in at as an average. Lets hope they are right. Cheers.

A tiny tiny percentage of houses sell at between £250k and £275-280k. That's just a fact. Ask your agent what chance they think you have of selling at £260k.

Ozzy1968

R_P_W wrote: »

Of course people sell and buy houses for more than £250k, but anywhere between 250 and 270 is going to be tough unless it is a real bargain at that price.

Cheers for the comment, I'm fully aware that people sell and buy houses over £250k, I was questioning the last posters comments. Seemed a rather strange comment not knowing what sort of property we are selling? As I said, time will tell.