Reformed spender...now first time buyer

AlphaSaint

Hello...I'm looking for some advice regarding a first time buy...whilst this is my post, I used advice from this forum to get myself clear of a difficult situation...

So I guess, thank you in advance for any advice and thank you for your patience reading this...I'm fairly certain my situation might well be familiar.

My story:

I'm young, and have been incredibly fortunate to have had a stable, well paying job since I started working.

Unfortunately, I was reckless with the money I earnt, spending beyond my means to lead a lifestyle I perceived was associated with my job and also because I felt I should enjoy what I worked hard for...without thinking about the future. What a mistake!

To support this, I ended up in a debt cycle, ending in payday loans. My payday loan cycle was as simple as any other...interest piled up, and I didn't accomodate for this amount going out of my wages and extended the amount I borrowed.

I ended up with a total debt amount of almost £30k (not all payday) through an ever growing spiral over about 4 years.

That's where you guys came in...

I felt trapped, like the lenders were much bigger than me, no negotiation...I learnt that this wasn't the case and came to agreements with almost all of them that I could afford to pay.

Importantly, I also changed my lifestyle...I lived on my absolute minimum, petrol and food, for 18 months while I stuck to my agreements.

The last of the payday loans was cleared last September, and I now have outstanding my credit card, which I pay the majority off each month and a small bank loan (held with the same bank as my current account) which I have kept up repayments on.

I also have the start of a savings account.

The future:

I happily became engaged 3 months ago, and we are looking for our first home. We are not in a rush to buy, but will do in the next 18/24 months.

My credit history is not yet repaired, I'm still in the lowest bracket, due to the number of accounts (even if settled) and searches on my report.

My partner and I are fortunate. We both earn good salaries and can save significantly over the next few months, but the credit score issue still remains.

What would be your advice in terms of ensuring a mortgage application has every chance of succeeding from the position I am in?

- Is it worth building savings with a potential lender?
- How long is it likely to take my credit report to become more normal?
- Is our time span realistic?
- Should I speak to multiple lenders and see what criteria they look for?

Thank you again, I really do appreciate your help.

gazfocus

To be honest, I don't think it really matters who your savings are with but when the time comes to buy a house, I would strongly recommend using a mortgage broker and not going direct to lenders.

ethank

AlphaSaint wrote: »

My credit history is not yet repaired, I'm still in the lowest bracket, due to the number of accounts (even if settled) and searches on my report.

Ignore the rating the Credit Reference companies give you. It means nothing to the lenders and they don't even see it.

Get you most recent statutory credit report from Callcredit, Experian, and Equifax and get these in front of a decent whole market broker.

AlphaSaint

Thank you both - I will certainly consider using a broker.

I guess with the report, the time between now and making a mortgage application will show a more consistent credit history.

ethank

Equifax
https://www.econsumer.equifax.co.uk/...?prod_cd=UKSCR

Experian
http://www.experian.co.uk/consumer/s...ml#orderReport

CallCredit
https://www.callcredit.co.uk/stat-re...t=1&mode=clear

Thrugelmir

AlphaSaint wrote: »

I learnt that this wasn't the case and came to agreements with almost all of them that I could afford to pay.

So you only made partial repayment of the debt to a number of creditors?

This will be a major negative on your credit file until a suitable period of time has elapsed.

A sizable deposit will help negate the consequences though.

AlphaSaint

Thrugelmir wrote: »

So you only made partial repayment of the debt to a number of creditors?

This will be a major negative on your credit file until a suitable period of time has elapsed.

A sizable deposit will help negate the consequences though.

Sorry I wasn't entirely clear. The whole debt was repaid over a period of time with interest frozen.

This was an agreement I came to directly with creditors when rollover interest became unaffordable.

Hopefully this has less negative consequences than suggested?

Thanks again!

kingstreet

You need to establish iof there are arrangement to pay markers all over your credit files.

get all three, as suggested. Pu them in front of a good whole market broker who will roadmap/timescale your options.

A lot is going to depend on how much deposit you have. 95%? You'll be waiting years. 85%+ or less, nowhere near as long. Under 75%, possible options now.

AlphaSaint

Thanks Kingstreet, that's most helpful.

We will be looking at approximately 80% LTV within 6 months.

Thanks again everyone, i will now speak to a whole market broker.