Shared equity 75/25, poor credit mortgage

shuggy75

Hi all,
I currently have a 75/25 shared equity flat which I rent out and pays for itself. The mortgage for the 75% was for just under 70k 4 years ago and today's settlement figure is 60400.

I am in the process of moving back into the area where the flat is, but because of having a tenant present and my family having grown I am renting a larger flat.

My credit rating at the moment is poor because of a couple of missed payments but have now been settled.

I have a lump sum of around 40k.

A house has come up in the area I'm looking for 70k.

Should I use the lump sum as
A) Pay off a large chunk of 75% mortgage I already have
Use it entirely for new mortgage(would a lender give me another mortgage!!)
C) Pay off the 25% equity and have smaller deposit on the new place.

Any advice on the best way to use this money would be helpful.

Thanks in advance

ACG

A couple of missed payments (unless on the mortgage) should not be "bad" credit - but get your report down to a broker. If you want to buy and your credit isnt great then a bigger deposit will help to overcome that.

shuggy75

Thanks, i should have said there was a ccj after the missed payments which were to a factor. I have never missed any mortgage or loan payments.

ACG

When is the CCJ dated? How much is it for? Has it been satisfied?

To be honest though, if your intention is to purchase for £70k and you have a £40k deposit i would be pretty confident there will be a lender for this.

shuggy75

The ccj was from the middle of 2010. Missed payment letters had been going to the rented flat and the tenant put them aside until the court summons arrived then thought it 'might be important'.
It has been satisfied only at the beginning of the year because of a payment plan.
I am just worried how lenders will look at the amounts i owe on the first mortgage, will they add the amounts together for a total liability?
60k on the first and then say 30k on the second? Or will the also take into account the 25% which i still owe on the first property?
(lots of questions i know, sorry)

ACG

Assuming you have consent to let from the lender (or possibly even without) and the rent is at the very least equal to the repayments (although ideally 125% then it may end up being ignored.

It is all possible but it will come down to the finer details. I think you need to get your credit reports, sit down with a broker and let them get everything down in one place and hand it over to them to do the leg work.

The size of your deposit i think will make this possible in the majority of circumstances so i would not be too worried at this stage, but it does come down to the overall picture.

Avoid an estate agent based broker, and you hopefully wont go too far wrong. At this stage i would hold the money back for a bigger deposit.

pcgtron

Are you sure you're allowed to rent your shared equity flat at all. Most of them don't allow it

chanz4

No you shouldn't be renting out