Any advice from a mortgage broker please?

saverstacey

Hi, would be very grateful for any advice regarding our situation.

We are currently in the process of selling our home £330,000. We intend to clear debts of £45,000 from the proceeds of the sale and would like to buy a smaller, more affordable home.

Our home has only just gone on the market so we are not sure exactly what deposit we will have towards our next home. Unfortunately we have a bad credit rating (defaults, not CCJs now on a DMP). My question is, say we have an offer accepted on a property for £170,000 what percentage will we expected to put down as deposit bearing in mind the bad credit history? Will we be able to get a 90% or 95% mortage? And at what rate roughly? (so I can work out if the repayments are affordable).

My salary is £35,424 (teacher), DH is self employed and cannot prove any salary.

The other question would be- do we any chance of going ahead with any mortgage before the sale of our home? Relatives would possibly be able to help financially. We have seen the perfect place at the right price and the owners are desperate to sell due to emigration.

Thanks very much

homer_j_3

Firstly you should still be able to get a 95% mortgage but like any mortgage, the bigger the deposit the better choice and rates you will get. You may also get stung with a Higher Lending Charge from the lender with a smaller deposit which can be expensive.

You have not given me enough info to give a better idea of rates because number of defaults etc and amounts can have bearing.

How long has your DH been self employed, does he not have accounts? If he does not then you could be looking at needing a bigger deposit to be able to self certfy. You are currently looking at 4.55 times your income so it looks achieveable if you have a 5% deposit.

You would not be advised to go ahead with your purchase before sale due to over commitment of your finances. You will have family to help but you will be straight in debt again to them and I am not sure how that would look on your DMP.

I would sell and when you have accepted an offer, then go and find somewhere. If its meant to be, it will be. Keep your finances straight and learn from your mistakes. Do not over commit yourselves again.

saverstacey

The defaults are 3 for smaller amounts and 1 for about £28,000.

DH has no accounts so we are looking at depending on just on my income I think. We did self cert last time and I would prefer to stay away from that again if poss.

Thanks so much for any further advice.

homer_j_3

looks feasible - when were they registered?

I would be looking at getting a 10% deposit if possible. You will be looking circ 7-8% maybe. As I said its difficult to try and put an accurate quote as you do not give enough info...and will unlikely to be able to give on here.

Are the defaults against you both or just one of you.

saverstacey

7-8%? wow thats scary!!! When I phoned L&C a few weeks ago they said below 6.5% (but they didn't ask for any detailed info)

Not sure exactly when registered, but I would say about 18 months ago. The smaller ones against me only, the bigger one should be us both as it was joint account.

Thanks again for your help and advice

homer_j_3

i would get a copy of your credit file and take it along to a local mortgage broker.

L&C wont want to know you at this stage as they have no intention of having a meaningful client/broker relation, they want to know people when deals are ready to be done - if they are not then come back later.

You will probably get a lot more from a local broker for your circumstances.