How much difference does a deposit make?

R997 · 23 September 2013 at 6:58PM

Hi,

I have what I think is a fairly straightforward question. Our financial history has been a chequered one in the last few years. Both me and my wife had good jobs which are well paid, but in the past we had a business which failed, leaving us with a significant (~£25k) of debts (CC and bank loans). We're in the process of paying it all back, and while I've been late on a few things I've never actually failed to make payments or been placed into any kind of collections system with the bank. My wife on the other hand faired less well, as it was her business. She did struggle to make payments on cards and a loan once the business went into unrecoverable decline, until she started a full-time job. Since then we've managed to keep going, although it has been a struggle.

We currently live in a rented house, having sold our old one. When the time comes to buy again, can we overcome our previous financial problems by placing a larger deposit? Hypothetically, if we wanted to buy a £300k house, and were able to put up £150k in cash, would the banks care as much about our credit history, or doesn't it make any difference? Is there a "magic" percentage that we need to cross? Someone mentioned to me that if you can put down more than 25% of the value then no amount of "crashing" would put you into negative equity, and therefore you're seen as a safer investment. Any truth in that?

Thanks,
R