Chances of successful mortgage app

WonkeyDonkey

Hello all,

It's been a while since last on the forum (keeping my head down and saving like crazy) but I now have a question about making an application for a mortgage.

Around a year ago I sold my house to pay off my debts. Since then I've been renting, but now would like to buy again. I need to get an idea of what my chances would be of a successful application. My details are as follows:

Salary: £53k
Overtime/bonus: £2.5k
Outstanding debts: none
Credit cards: x2 (used regularly and balance paid)
Deposit: up to £18k
House Value: £240k (looking for help to buy)

Credit History: 2 defaults 12 months ago, for £400 and £600, both settled. Several payday loans, all over 12 months ago, all settled on time.

Ideally I'd like to use Help to Buy but fear that my defaults of only 12 months ago will scupper my chances. The past year has been absolutely faultless.

Any advice would be greatly appreciated

kingstreet

WonkeyDonkey wrote: »

Deposit: up to £18k
House Value: £240k (looking for help to buy)

Credit History: 2 defaults 12 months ago, for £400 and £600, both settled

I would be very surprised if any lender wanted to lend you 92.5% with recent defaults.

WonkeyDonkey

Thanks for the honest response.

Would it make a difference if I could raise the deposit to 10% or even 15% (although it would mean that I would then have an outstanding loan for approx. £10k for the last option)?

ACG

Are the default and pay day loans on all 3 credit reports?

If so then I cant see this being possible to place until they are 2 years old and you have a 15% deposit.

Thrugelmir

WonkeyDonkey wrote: »

(although it would mean that I would then have an outstanding loan for approx. £10k for the last option)?

Borrowing the deposit doesn't help.

WonkeyDonkey

Thrugelmir wrote: »

Borrowing the deposit doesn't help.

I wasn't planning on borrowing more. Perhaps I should amend my details to this:

Salary: £53k
Overtime/bonus: £2.5k
Outstanding debts: £19k
Savings: £41K
Credit cards: x2 (used regularly and balance paid)
Deposit: £21k (or at a push £30.5K)
House Value: £210k

One of my biggest questions is how best to use money in my savings account...do I pay off all my debts or retain some and up my deposit.

Thanks again for your responses.

WD

indextwo

I can't find the link right now, but last week I was reading an article by The Very Martin Lewis Himself (in the Telegraph, I think?) which said that, after a student loan, a mortgage is just about the best loan you're ever going to get. Any other kind of loan - personal, credit card, payday, etc. are all going to be ridiculously more expensive. If you can afford to pay of much higher-rate loans, then you should definitely consider doing that whilst you have the means.

Thrugelmir

WonkeyDonkey wrote: »

One of my biggest questions is how best to use money in my savings account...do I pay off all my debts or retain some and up my deposit.

With an MSE hat on, pay off the debts is the sensible option. Then use the money saved to build the deposit up.