First Time Buyer with Credit History

TDias

Hi there. First time here, urgently need help!
Here are my circumstances: I am married and we both work full-time in permanent roles in London with a joint income of 60K.We are about to receive 80K as a gift from family to help purchase a property. However, due to severe illness and reasons beyond our control, in the past we ran debts after the birth of my son (defaults on credit cards and loans) which have all been consolidated and are currently being regularly paid monthly via agreements, some already successfully paid in full.
The financial plan now is: to use the gift to settle all debts this year and clear all credit cards, close any unnecessary accounts, and keep a clear history from now on, and have the remaining 55K invested on a deposit and all fees for a mortgage as we pay a small fortune in rent (£1500/mth for a two-bed near work). We will not have other financial commitments after the above are settled, we live frugally apart from renting in a nice area near a great school and are serious buyers.
My questions are: how long would I need to wait in order to try to get even a sub-prime mortgage and what chances would we have to be offered one? (I've received various pieces of advice: wait for one year or even three years after clearing debts and having a good credit file and then apply; wait for six years till all bad history is cleared and then apply; only rent and invest money in a pension pot and not get a mortgage at all, which I've concerns about as cannot see myself renting after retiring as just starting a pension plan now)
If we have to wait, I plan to lock the 55K in a long term high-return saving account, for 2 or 5 years depending on how likely it is that we were given an offer.
This is not about getting on the property ladder or status, simply to provide a stable home for my child.
Thanks very much for any serious advice. I've tried to contact independent advisors before but as our mortgage would likely be about 200K max, many do not deal with complex cases from low earners.

ACG

General ruleof thumb is 1-2 years from when the defaults are dated (note that is dated - not satisfied) providing you have a 15% deposit.

Less than that and you would be looking at 3 years.

Dave_Ham

Its all about the date of the defaults.

Well worth putting some time in and obtaining all Experian, Equifax and Call Credit reports.

There may be differences and many of the specialist lenders will check more than one file.

Oh, and you will almost certainly require a broker for this sort of purchase.

Best of luck

TDias

Thanks very much for the reply Dave. I've just finished checking my report in Experian, most issues date from 2010. I understand it is all about dates of the defaults, but would it not be best to first clear all debts and check improvements on my file before assessing my options? On various mortgage calculators, including the one on this site, I could get between 150 to 200K mortgage and would have a 80% LTV. Thanks

Dave_Ham

Initial reaction is that you can achieve a mortgage now, whether it is the right time for you personally now is for you both to decide.

The dates of the default/s allow a few specialist lenders to look at this case and maybe a tad more than you are currently thinking value wise.