Looking ahead - chances of getting a mortgage?

ckelly81

Hi All

Been lurking for a while - now time to post!

myself, DH and DS currently live in a 2 bed flat (Housing Assn) and expecting baby no.2 in a few weeks.

For the past year, we have worked really hard paying back as much debt as possible. This time last year we had over £20k in debt, it is now just under £6k. We would like to clear this within 6 months.

At the same time, we have just opened a Nationwide Save to buy acct which we are putting in about £250 a month in. This will increase to about £1000 a month, once the debts are cleared.

Anyway, once debts a cleared, and we have a good amount in the S2B acct, we would like to look at our chances of getting a mortgage.

Thing is, DH's debt was mostly with a DMP (Payplan). This got paid off in April :j and now the debt is all in my name, on CC's.

Will this DMP history affect our chances? Will we be able to get a 95% mortgage or should we look to save more for an 80-90% mortgage?

Combined income at the moment is about £55k p/a and will have 2 dependents by then. Reckon a place we would look to buy would be in the region of £180-200k.

Any advice welcome, thanks

ACG

DMP is worse than a CCJ or default.

I dont think he will be getting a Mortgage for a good few years and certainly not with a 5-10% deposit. I would personally say more like 25-30% and once it has been paid off for at least 2 years.

It might be worth getting all 3 credit reports down to a GOOD broker (forget the estate agent brokers), but the nationwides save to buy scheme wont work i dont think... although its worth asking what their stance is on DMPs.

Thrugelmir

I would ring the NW and enquire what implications the DMP will have. As normally this will have an impact in terms of years.

Targeting a larger deposit would certainly aid your cause.

Don't despair though. You've come a long way on your journey. Stick with it and you will get there in the end. When you do, you'll gain immense satisfaction from what you've achieved.

ckelly81

Oh man heartbreaking! The thought of being stuck in this flat for another 2 years fills me with dread! No point private renting as this will double our rent eat into our savings.

Thanks for your reply though. I did fear as much to be honest.

Think we will speak to NWide once we actually have some money on the acct and a realistic goal to aim for.

ckelly81

and I think I need to think of being here for longer than 2 years if we need to save £40 - £60k...

ACG

Actually i have just remembered, there is a new lender to the market. They accept adverse - in theory this could be one for them upto 80% LTV but with rates of 8-8.5% you would need to be comfortable that you can afford it.

Its not ideal but it could be a means to an end? Then remortgage with a "better" lender in 2 years time, although i suspect you would still need a semi adverse lender at that point, but rates would be closer to 5-6%.

ckelly81

thanks ACG

Those rates don't look appealing to me.

We were thinking about relocating when we buy as we get more for our money elsewhere, so I think we will still consider relocating but renting first.

At least that way we can still save and get to know the area a bit better before we buy up there.

Trying to look on the positive side!

Thanks again for your replies

ckelly81

Further to this, would we be eligible for the government help to buy scheme so we only have to apply for a 75% mortgage?

Thanks again in advance

Thrugelmir

All mortgage applications are subject to same stringent underwriting process. The individual(s) applying need to quality in their own right for the product being applied for. This is the new norm. There's no going back to the crazy days of credit boom.

ACG

ckelly81 wrote: »

Those rates don't look appealing to me.

To be fair though, lenders are probably thinking the same about the credit report (i dont mean that in an offensive way, although it probably does read like that).

Sometimes short term pain is worth the long term gain - im not saying thats the case in this instance only you can decide. From a personal perspective i wouldnt be interested in paying 8% either but it wasnt too long ago that 8% wasnt unheard of.

ckelly81

The payplan thing doesn't even seem to appear on the credit report, having checked experian and noddle. It was first taken out over 7 years ago. He has since been able to get credit(cards and a loan- not that we took it out in the end)
So would we have to declare payplan when it comes to applying?
I understand it could still be a long journey before mortgageville, just thinking out loud and trying to gather as much info as possible so it's not such a shocker when we do start looking!