Advise for a wannabe home owner

ellievin

My partner and I currently rent but are desperate to own our own home. We are 24 and 30 and earn a moderate wage of 20k and 16k and are looking to start saving as much as possible. We were hoping to be buying in around 3 years but looking into it I am worried it's an unachievable goal. I've previously had money problems with late payments on credit card and bank charges for going overdrawn. I've now made a real effort to organise my finances so this no longer happens but reading through some posts it takes 6 years for these to come off your credit file does this mean I wouldn't be accepted till then? I had my banking spread across 2 banks and we had moved home 3 times in 3 years so I feel this may have effected my credit. I have a 4k credit card which is being paid off monthly and was declined store credit around 6 months ago. I am just really worried I will never be accepted for a mortgage and would like some advise on how I can fix the damage I've done to my credit?
Also whilst I'm here we'd be looking at property prices of around 160k, what kind of deposit would I need?
I know this is a disastrous situation but I really hope I can turn it around and appreciate any advise!

monty-doggy

You need to bring down your debts first and foremost, and cut back as much on all other expenditure. There's no point In saving for a deposit when you have lots of debts and bad credit.

Whatever you do DONT apply for any more credit in any way shape or form.

Get copies of your credit files and make sure any settled accounts show as settled, and there's nothing on there that shouldn't be. Make sure you are on the electoral role.

When the time is right, use an independent mortgage broker who will help you find a mortgage based on your credit files.

The bigger deposit you have, the easier it will be to get accepted for a mortgage. Some mortgages are available with 5 or 10 % deposit but
It's very unlikely on your current salaries you can borrow £160k, mse calculator shows between 90 and 126k.
As I said, the bigger the deposit the more likely you will be to get offered he mortgage and a lower interest rate.

You will also need money for legal fees, moving costs and stamp duty.

If you are serious about wanting to own you need to have a real look at your finances there's so much more to owning a house than the mortgage payments, you will need a contingency fund for general maintenance and repairs, you will need buildings insurance and contents (optional).
You might want to think about life insurance to protect you if one of you dies, so the other one doesn't lose their home.


I know it all sounds negative, but if you are determined, it can be done. I've been where you are and now finally have my own home.

ellievin

monty-doggy wrote: »

You need to bring down your debts first and foremost, and cut back as much on all other expenditure. There's no point In saving for a deposit when you have lots of debts and bad credit.

Whatever you do DONT apply for any more credit in any way shape or form.

Get copies of your credit files and make sure any settled accounts show as settled, and there's nothing on there that shouldn't be. Make sure you are on the electoral role.

When the time is right, use an independent mortgage broker who will help you find a mortgage based on your credit files.

The bigger deposit you have, the easier it will be to get accepted for a mortgage. Some mortgages are available with 5 or 10 % deposit but
It's very unlikely on your current salaries you can borrow £160k, mse calculator shows between 90 and 126k.
As I said, the bigger the deposit the more likely you will be to get offered he mortgage and a lower interest rate.

You will also need money for legal fees, moving costs and stamp duty.

If you are serious about wanting to own you need to have a real look at your finances there's so much more to owning a house than the mortgage payments, you will need a contingency fund for general maintenance and repairs, you will need buildings insurance and contents (optional).
You might want to think about life insurance to protect you if one of you dies, so the other one doesn't lose their home.


I know it all sounds negative, but if you are determined, it can be done. I've been where you are and now finally have my own home.

Thankyou it's encouraging to know its doable, thanks for your advise. Realistically it's going to take longer than 3 years as property prices in our area are high so best pay off my credit card and save for a big deposit!!

monty-doggy

Get on the thrifty boards on here, you'll be surprised how much you can save/cut back. Get your debts clear and have a 5 year plan. 35 is no age for a new mortgage, and with any luck it will be paid before you retire