Don't know exactly where to start with this...

SpeedyBoots

Hello folks,

Don't know where to start with this one to be honest, so here is the situation. I have lived on my own since the age of 18 (not through choice, alot of family problems) and racked up some debt, defaults etc. Now at the age of 22 (soon to be 23) I'm still renting. My credit file is poor with a few defaults on there and some outstanding balances which I have started to pay off.

Now, speaking to my family, I am shocked and indescribably grateful that they are telling me that it would be an idea to look into buying my first property, and that they would like to get me set up with a deposit, and to start looking at mortgage options etc.

Now, with the bad credit I am of course very worried that I will have no chance at all, but I am asking for some advice. I'm so sorry for the newbie questions I literally have no idea exactly how it all works and what to do next.

I am in a full time, steady and professional career (and have been for five years) which pays an average amount (around £1320pm). I'm paying rent of £350pm at the moment. In terms of amount for deposit, I have no idea what budget I have (which is of course a sensitive subject which I must approach my family with caution etc) but they have asked me to start looking into this and do some digging.

Can anyone tell me where to start? what I should be doing? (aside from attempting to repair my bad credit) and what options I have available?

Again, I'm sorry for the newbie questions, I feel a bit out of my depth.

Thankyou in advance everyone.

SpeedyBoots

Bump - a worried member here

okborednow

I'm sure one of the more knowledgeable guys will be along tomorrow so fret not

My thought based on what i've read on here previously would be you'd need to try and get a 15%-20% deposit and it may be worth saving some of that yourself. If you have bad credit and can't show any evidence of being disciplined enough to save it may ring alarm bells with lenders.

Once that's done i'd get a copy of all three of your credit reports and take them to a mortgage broker. They should be able to give you a realistic idea of your chances of being accepted and suggest the best lenders to approach.

Thrugelmir

Addressing any debt issues should take priority.

SpeedyBoots

Thanks so far guys.

Instead of burying my head in the sand I've written down the amounts and details of my debts. Two of them I'm paying off every month with one or two that need sorting.

Please advise folks.

Annisele

"Bad credit" can mean all sorts of things. Depending on the severity of the bad credit, it might make no difference at all, it might mean you need a much larger deposit, or it might mean you're completely unable to get a mortgage.

If you post more details of the bad credit (including dates and amounts) some brokers might be able to help.

Or, you could get all three of your credit files, take them to a whole-of-market broker (not a bank) and see what they say.

ACG

What bad credit do you have?
Defaults/CCJ/Missed or late payments?
When are they dated how much are they for?

As for what you can borrow typically this is around 4x your annual income minus any credit commitments you have. So if you have an annual income of £20k and commitments of £1k a year then... £20k - £1k =£19k x 4 = £76k is approx what you can borrow add to that your deposit and that would be your purchase price.

Going back to the deposit - without knowing more about what bad credit you have its impossible to say. A good starting point is 15% as its possible to overcome a lot of adverse with some lenders at 15%... but dont hold me to that as you havnt mentioned what adverse you have.

SpeedyBoots

I can't thank you guys enough for your advice so far, so thanks again.

Problems with getting my credit report on Noodle, I intend to go back to Experian but it would look like I have a few defaults still outstanding, one for £700, one for £500 and one or two for £300ish. No CCJ's, both missed and late payments to be honest.

These need to be addressed ASAP I am well aware. Two of the above are being paid off monthly (come to think of It I should get a written statement of payment plan).

I need to be paying these off monthly before anything else I think, it would look like a mortgage is pretty much non-existent for me for now.

Thrugelmir

SpeedyBoots wrote: »

I need to be paying these off monthly before anything else I think, it would look like a mortgage is pretty much non-existent for me for now.

At least you are heading in the right direction. Time will heal.

ACG

Payment plan are 2 words i dont like - is this a debt management plan? If it is then i would say your chances are slim at best unless you have a good 25-30% deposit.

Without seeing the credit reports i think sitting down with a mortgage advisor and your reports will be the best option. My suggestion would be to avoid estate agent based brokers.

SpeedyBoots

So, I managed to sort out my Experian report and got a fresh, full updated one.

I've gone from a credit score of POOR to FAIR (currently 833) and I have had a look through my defaults, what is outstanding etc and this is how it is shaping up:

Unpaid Defaults

• £424 - historic HSBC account - calling them on Monday to offer repayments of £25 per month
• £700 - historic payday loans company (silly me) - called them but their system is down so couldn't look into my account

On my file there are also 3 satisfied defaults. The above is slightly better news that I expected when I signed into Credit Expert, my priority being the repayment of the above unpaid defaults.