first time buyer, adverse credit & help from parents.

sarah_barker

Hi everyone,

very much in the early stages of looking to buy but just wanted some opinions

I have been renting privately for the last 3 years and to help me get onto the property ladder my parents want to gift me the deposit to buy my first home. I earn 25k and have been in my current employment for 12 months (permanent contract, salary likely to increase to around 29k within next 12 months or so)

This should be straightforward however in 2009 I took out a Debt Relief Order. All the included debts show as satisfied on my credit file and are due to fall off in November this year. Aside from this, I have one late payment marker on a British Gas account in 2012 but everything else is up to date (I have two credit cards that I pay in full each month (Capital One and Aqua), contract phone, an interest free credit agreement on something I bought last year, Next account with £100 on, small overdraft etc).

I have been able to obtain credit relatively easily over the last couple of years but still can't get a 'normal' credit card, i.e. high street bank, intro offers etc (haven't tried to apply for one in last 6 months) so I am a little bit worried i'd have no chance with a mortgage!

Am I likely to be able to get a mortgage either through the government schemes or family assistance mortgages some lenders offer? The Barclays Helpful Start mortage looks interesting however I am unsure as to how much of a part my credit score plays when applying jointly with my parents (their credit score is excellent). As I have been able to keep my current credit in good standing since I had the DRO, is it likely that come November my credit score will immediately improve and make it easier to achieve the high street rates?

Thanks

sarah_barker

anyone...?

kingstreet

As adverse credit data falls off your credit file six years after it was added, either wait until then, or speak to a broker who would be best placed to advise you in the options open to you.

Placing adverse credit business is based on two main pillars, time and deposit/loan to value.

You've told us about the time, but you've just told us the deposit but given us no idea of what that means in the context of your purchase. It will be easier to get a 75% mortgage than it will 95%.

amnblog

As KS says.


Getting lending should be possible with a good broker.


Getting the lending you want with the deposit you have may be more difficult.

sarah_barker

I'd be looking to buy around the 100k mark with a deposit of about 15k so 85% LTV. If I buy through Help to Buy and such like the LTV will be much lower or is this treated differently?

Thanks

kingstreet

Are you going to buy a newbuild, or are you confusing HTB - Equity Loan on newbuilds with HTB - Mortgage Guarantee on second-hand property?

On HTB - EL cases, yes the LTV would be lower as the Government loan adds to your deposit.

On HTB - MG it's just a mortgage of 90% to 95% so no help to you at all.

sarah_barker

HTB - EL most likely as i'm quite attracted to new builds as a first time buyer anyway in terms of convenience.

So, for example I could look at new builds up to around 135k. With a 13.5k deposit and the 20% EL i'm only going to need to secure a 70% mortgage?

Am I in with a chance?

kingstreet

You would have a 20% equity loan and 10% deposit on a purchase price of £135,000, so a 70% mortgage would be required.

Provided you have no late-missed payments in the last two years and any adverse credit is more than three years old, you should be able to borrow on the HTB - EL scheme, yes.

Bear in mind your affordability is affected as lenders take 3% of the equity loan off your borrowing power and ground rent and service charges have to be factored-in too, if there are any.