Its a mortgage and debt problem??HELP PLEASE

houston

Ok, I admit it - I'm going round in circles, can anybody help me, all (I think)advice very welcome and much appreciated. Oh and if I'm in the wrong place can someone point me in the right direction? thank you and here I go:

living in housing association property, want to buy, 2 years ago were valued by HA @ £125K, less £9K discount, purchase price £116K. we didint buy because we were only self employed for 2 years and couldnt for love nor money find a mortgage that didnt scare the pants of us: my credit history is not great (1 ccj for 1K, almost paid,, 2 defaults, 1 almost paid, ) but husbands is fine.


INCOME: self employment: £13398 (self cert) per annum
child benefit :£2808
child tax credit :£7800
working tax :£364

OUTGOING: month= gas- £47,,,electric-£60,,,rent-£316,,,car/ins-£38,,,house/ins-£27,,,food-£500(family of 6+2dogs,5fish,2gerbils ),,,car tax/petrol-£25,,,counc/tax-£106,,,water-£100(including arrears for ccj),,, C/C's-£100(2),,,intrum justicia debt-£20,,,argos-£13(not spending just paying,,,littlewoods-£14(not spending just paying),,,work outgoings-£100(broadband,hosting, tax deductable at end of year),,,appliance cover-£15,,,pet plan-£27,,,tax-£35,,,loan from father direct to bank-£156,,,loan from father- in-law direct to bank-£216,,,C/C from father-in-law-£98,,,inland revinue tax payment plan-£90,,, husbands ciggies- £80

OH MY GOD

what we planned to do was buy this property with a RTA mortgage(no we dont have a deposit )and consolidate the C/C's and loans, to be paying less monthly. we now have an accountant on board and two new projects launching imminently wich will increase our income but we are only going by what we have coming in at the mo, not going to speculate until its in the bank.

Q. should we buy and consolidate, we have had the house valued independantly by 2 local estate agents, 2 years ago, and it was valued at £145K and £160K, which could mean with the HA's value we could then resell, pay back the discount and hopefully make a profit.

Q.are there any mortgages which will suit our requirements. I have researched loads, UCB, L&C, we always seem to be one criteria short with most of them, i.e. no deposit or self- cert or my bad creidt, there must be someone who will assess our mortgage needs on individual basis?

Q. should we stay put and never get on the property ladder and forget about the whole thing?

It has helped by putting this down, any advice welcome, thank you for your time in reading, hope it makes sense, any questions please ask

houston

pusscat

A: - stay put and forget about the whole thing

Here is the reasoning I would use if it was me......

At the moment your outgoings are more than your incomings, you have debts and poor credit and I can't see that any lender is going to offer you a 100% mortgage on self cert with no deposit on those terms.

Even if you can find a lender, you have no money for stamp duty, surveys, solicitors fees (probably in the region of £2.5k) and on your current level of outgoings you are slipping into the red by a further 3k every year. OK, your other projects may come off, but there is no guarantee at the moment.

Even if you did find a mortgage, suddenly your payments for housing will go up (dramatically!) from £319 a month to maybe £1000 (depends on % and if IO or repayment) and if you are behind on your payments you could loose your house.

Your financial postion appears to be pretty borderline at the moment - taking out further debt can only make it more so.....

You are also transferring non secured debt into secured debt - fail to pay and you could loose your home much more srious than a CCJ. Mortgage lenders (especially subprime ones) are not known for their generosity when people fall behind with payments.

If you had managed to pull off your purchase 2 years ago I am not sure that you would have made that much anyway - your figures are a bit confusing, but at a guess:

Stamp Duty and solicitors fees to buy - £2.5k
Increase from rent to mortgage - £700 per month (estimate) so £16,800 over 2 years (even if it is repayment in the first years you are usually only covering the interest anyway)
Higher lending charge (as you have 100% mortgage) - £50 per month - £1200 over 2 years
Maintenance on the house - £1000
Buildings insurance - £500
Estate agents fees to sell at £150k - 1.5% plus VAT - around £2500

That is somewhere in the region of £25k to own the house for 2 years (including buying, maintaining and selling costs). From your figures it looks as though you would have made somewhere in the region of (best case scenario) £34k profit, you would have to pay £9k ish back to the HA, so you would be left exactly where you started by my rough reckoning - there would be nothing, or very little surplus to pay of any debts.

In the last 2 years your house appreciated approx 20% - do you think it will continue to do so for the next 2 years? That would mean that your house would double every 5 years or so.

If I was in your position, I would look to do the following

sort out he incomings/outgoings mismatch
pay off all the outstanding debts
increase the incomings
save a deposit
look to buy

Hopefully, by the time you have managed to do that, you will be entitled to more of a discount, the market will have stabilised, you will have better credit ratings so you can use mainstream lenders, you will have a deposit so you can get better rates and you will be in a far more stable position financially

None of this is having a go - it is just difficult to put things on an internet forum without them appearing harsh, but you asked for thoughts and those are mine.....

Good luck with it - I would also strongly recommend that you visit the Debt Fee board and let the experts over there look at your debt issues - it may help you to solve the problem far faster.

Puss

xx

houston

thanks for the advice, you have a some very good points

pusscat

houston wrote: »

thanks for the advice, you have a some very good points

Sometimes it is just easier to see when it is not your own money.....;)

Good luck with the new ventures BTW - I hope they work out really well!

Puss