mortgage query

Seventieschild

I've been reading the threads with interest, so thankyou for that.

We are considering getting a mortgage in the next year or so, however I do have some concerns. We are both in long term employment, NHS clinical staff and earn 36k each. One loan which we both pay of £7k due to finish in two years.

My partners credit rating is very good, mine, unfortunately has a default (now settled) to Capital One two years ago - default was for 2k. I have a mobile phone contract and an old overdraft to the clydesdale which they converted into a loan and I will finish this in March 2015.

Have I scuppered our chances of getting a mortgage at reasonable rates?

Thankyou

Edi81

How much are you looking to borrow? How much deposit do you have?

ACG

How much will your deposit be as a percentage of the purchase price?
If you have 15% deposit you should be able to do it now, if you have a smaller deposit there MAY be lenders but the rest of the case will need to be very good.

Seventieschild

Sorry I should have talked about prices. Hoping to buy for around 140k, will have deposit of around 15-20k next year.

ACG

There will be lenders for this without doubt, subject to the rest of the case.

You may get high street but for now, assuming worse case scenario you may not and rates would be getting on for 4.75-5%.

I would recommend using a GOOD broker for this. Getting a good broker on it could be difference between getting high street and not, which in turn could save you a small fortune.

Thrugelmir

What was the reason behind the default? Why settled 2 years later?

Seventieschild

Hello everyone
I am the missus.
Since the posts above,things have moved on a little.
We plan to apply for a mortgage in the next few months. All together (with savings and generosity from family) we have £15k deposit, which is about 8% of the property we would like to buy. I have a loan that finishes in 12 months. Unfortunately I have quite a large credit card debt (around 6.5K) and was thinking of getting a consolidation loan to cover the credit card debt and remaining loan. I believe I have a good credit rating.
Does anyone know if getting a loan this close to applying for a mortgage will hugely affect the chances/or the APR on the mortgage.
Thanks

Debtslayer

Hi
I don't think it would be a very good idea to apply for a loan now if you are thinking of applying for a mortgage. Lenders will not like that, especially if it's a consolidation loan. You need to show that you can manage credit.
The amount you owe will affect the amount you can borrow off a mortgage.
Also I don't think your deposit will he enough at 8% I think you would need at least 10%
I think you need to speak to a good independent mortgage advisor

AnotherJoe

Seventieschild wrote: »

Unfortunately I have quite a large credit card debt (around 6.5K) and was thinking of getting a consolidation loan to cover the credit card debt and remaining loan. I believe I have a good credit rating.
Does anyone know if getting a loan this close to applying for a mortgage will hugely affect the chances/or the APR on the mortgage.
Thanks

I'd say from the POV of a lender you don't really have 15k, you have perhaps 5k because there's your credit card debt and your loan to remove from that and you are asking them not just to loan on a house but your debt.

If it was me I'd be saying how come you had 18 months to be saving and instead of finishing up with a bigger deposit you add to your debt, so why would I think you'd be able to manage a mortgage? Your generous family are financing your credit card debt not just your house. To make it clear, let's put some numbers to it. If you've "saved" say £6.5k in a savings account and also run up £6.5k on credit cards, you haven't actually saved anything have you?

Sorry to be so harsh but what makes you think you can manage a mortgage when, with a clearly defined target of getting a house you've gone out and run up these debts which as well as being unaffordable, should have been obvious would detract from your ability to get a mortgage ?

MortgageMamma

I see your point AnotherJoe but perhaps the CC Debt is just something that's always been there and the balance has fluctuated - debt like that can arise very quickly....some examples- car written off need another, funeral costs for deceased loved ones, education expenses, its very unlikely people can plan for every eventuality - they both have secure jobs earning 36k each, 6.5k of credit card debt is hardly a crime. On the face of it the affordability is realistic but the OP does not say if they have children or how much the overdraft that was converted to a loan by Clydesdale is. The default is satisfied so that's a positive thing and the purchase price of the property isn't scary. On the whole I would say its a fairly good prospect.

AnotherJoe

The "golden rule" is to have money saved for those sort of eventualities MM! If it needs to go on credit card, how will they cope with a mortgage and then losing one job, or interest rates rising, or or or ..

As it is, the OP, having had 18 months to save for a mortgage has accumulated debts instead and fooled themselves they have saved. Either that was very poor planning on their part, in which case how would they handle a mortgage, or they were living on the edge and unfortunate circumstances caused this - again, in which case, how would they handle a mortgage ?

Maybe I'm being pessimistic but having seen how mortgage companies regard even transitory debt on credit cards (eg always pay it off end of month) , I don't think it's good news for the OP how they would deal with a long term credit card debt. I strongly suspect they'd regard it as needing to be offset against their "savings", from what the OP has said that would wipe most of them out.