Steps to take to improve chances of a mortgage next year - advice gratefully received

Straightandnarrow

Hello, this is my first post

I am really hoping to get a mortgage with my boyfriend next year, once we have saved a 30K deposit between us. We will be first time buyers with a combined income of approximately 55K per year (although this does not include commissions, etc.) I may be changing jobs, in which case may earn slightly less bringing us down to say 50K at the lowest between us.

Fortunately, I have 16K for a deposit in an account which is difficult to access. I don't want to touch this now unless I really have to (there are various reasons why). I currently have 4K debt left on two low interest credit cards and an overdraft, which I can realistically clear in time for when we would be looking to apply for a mortgage - although obviously I will ideally clear it sooner and start adding to the deposit. As I have had this debt for a while, will this affect our chances of gaining a mortgage even if it is cleared and accounts closed by the time we apply? I have checked Equifax and noddle and have no late payments - my accounts are all up to date for each month (minimum payments) with a score on the high end of 'good' for Equifax. I will be able to provide savings account statements for this year (with the the deposit money in) and current account statements which show I buy almost nothing except fuel, food and and bills each month!

The other issue is that I have a number of Payday loans on noddle, which were all paid on the time - the last being February of this year. As over a year will have passed, will this still be an issue? I didn't realize they impacted negatively on credit score otherwise would not have used them - it was a complicated situation which wouldn't come up again.

My boyfriend has a very good credit history with no debts (though he has had credit cards etc in the past all kept up to date). One of my parents has also volunteered to act as a guarantor.

Please can anybody advise? It would be a dream come true to buy first home and I want to maximise our chances! :j

kingstreet

You should be fine.

Just stay away from NatWest. PDL = automatic decline.

ACG

Payday loans a year old wont be an issue.

Im not sure why you need a guarantor, there is nothing that suggests you will but its important to note a guarantor isnt there to get over bad credit, just to act as a bridge between what a lender will lend you and what you need if there is a shortfall, but as you dont say how much you want to borrow its difficult to say whether one will be needed or not... ti give an idea i would say you could comfortably borrow £200k possibly even as much as £250k on your incomes alone and then your deposit on top would make the maximum purchase price.

Im not entirely sure what your question is but you seem like you will be in a decent enough position when the time comes.

kingstreet

ACG wrote: »

Payday loans a year old wont be an issue

Do they disappear off Equifax after a year? Not actually seen one, TBH.

Thrugelmir

kingstreet wrote: »

Do they disappear off Equifax after a year? Not actually seen one, TBH.

History is retained for 6 years.

ACG

No its a 6 year thing isnt it.

I just meant more in general, if you used a pay day loan once or twice a year ago then its not going to be a deal breaker on getting a mortgage. It may be with natwest as you say but there will be lenders who wont decline a mortgage for that alone.

Thrugelmir

ACG wrote: »

I just meant more in general, if you used a pay day loan once or twice a year ago then its not going to be a deal breaker on getting a mortgage. It may be with natwest as you say but there will be lenders who wont decline a mortgage for that alone.

Why would anybody require a Payday loan. Suggests that something isn't right irrespective of the picture being painted. The fact that the deposit isn't accessible and an overdraft is being used suggests that far more to the tale.

ACG

The money could be in a bond?

The PDLs would be a year old and OD cleared. Im just taking everything at face value, there could be issues but equally there may be valid reasons.

Straightandnarrow

Thanks - this discussion is great because I want to know how the whole picture will appear to a lender. The deposit will be easily accessible in a couple of months, by which time I will be well on the way to clearing remaining debts. Will a lender be concerned that my overdraft will still be used up until a few months before the application? If so, then maybe I will need to think about paying this off now and then repaying money into savings instead.

The PDLs do not show on Equifax at all (apart from one credit search from one PDL company) but are all there on noddle. I don't know about Experian yet. They were taken out in small amounts when I was effectively picking up bills for a friend who was unable to; she did pay me back gradually but I took the hit on the interest. I know it is immensely stupid when I did not have the funds better available at the time but as an adult, it was a choice I decided to make. I didn't know it would impact on my chances of getting credit in the future and it does seem unfair, as I was not only paying my bills on time but her's too! Never mind, have learnt my lesson :beer: