Mortgage Advise Greatly Appreciated

Andrew1903

Hi,

We are both first time buyers looking to purchase a new build in Scotland for £250k. We had been looking to go for the house that's came up next year when the next phase of the scheme got released. But this week we received a phone call saying someone has backed out and we are 1st on the reserve list! Luckily enough they haven't started work on the house just yet so we can pick everything ourselves.

We are looking to take advantage of the help to buy scheme, which would contribute 20% of the value of the house (£50k) and we are putting forward 5% (£12.5k) meaning we are looking at taking out a 75% mortgage of £187.5k

We as of now have no debts and combined salary of £70k (£45k & £25k) I have 2 defaults dated Nov 2009 & Feb 2010. How much of an effect are these likely to have on our joint mortgage application? Will the fact we are using the help to buy scheme, and in effect are putting up 25% deposit have any influence on our chances? Or would it be better to wait until these defaults drop off my credit file. My current score on experian is 968 for what that is worth?

In 2013 we had an agreement in principle for a mortgage up to 175k (without the help to buy) but since then our combined earnings have went up around £20k.

After telling the house builder this, showing him the previous mortgage agreement and advising him we are earning a good bit more now, he was satisfied and has gave us until next week to decide if we want to go ahead and reserve the plot as they are due to start work on it shortly, and if we decide we don't want it it gives him time to work his way down the reserve list.

The house wont be ready to move into until January 2016, so we were advised not to do any mortgage applications until within 6 months of then, as any agreement would only be valid for 6 months meaning we'd have to apply again.



Any advice greatly appreciated. Thanks in advance

Andrew1903

Top marks for spelling! Couldn't even get the title right!

amnblog

These defaults can be a problem.


A lot depends on their size, where they came from, and your overall credit files. We have done similar cases.


The pool for equity loan lending is relatively shallow.


Find a good broker to assist you.

Andrew1903

Thanks for the reply amnblog.

The one in Nov 2009 was for £230, a mail order agency.

The one in Feb 2010 was for £533, a mobile phone bill that was disputed when my phone got stolen.

Both fairly small amounts. All accounts since have been kept in order and payments made on time. I have a couple of credit building credit cards which I use mainly for online purchases and pay them off ASAP.

amnblog

Sounds manageable Andrew.


Apply late June for offer late July/early August to meet your January 2016 completion date.

Andrew1903

Thanks for the help!

One more question which I forgot to ask on the thread opener.

Would a guarantor help? Or would we be better going it alone? As my parents are willing to act as guarantor for us if need be. As they are both 55, would their age be an issue if we are looking at a 30 year mortgage?

amnblog

No, a guarantor is of no help with the potential issues you have.