Queries and advice

Ekguy39

Hi All,

First post and looking and any advice and tips would be helpful

I am looking at selling my flat and buying a house hopefully next year (sooner if possible). I’ve been interest only for a long time so have no equity in the flat and will do well to just break even on it. This is mainly due to it being electric only and the fact a neighbour sold his for a very low price three years ago.

Me? I will admit to at one point living a champagne lifestyle on a cheap beer budget, I racked up a lot of stupid debt and my credit rating isn’t the best. Thankfully I took the time to move back home and sort out the situation.

I have cleared over 30k of the debt and have only approx. 9k left to go which I will have done by the end of the year. 5k of the debt is to the bank of mom and she wants me to stop paying the debt and focus on the deposit for the house. I’d rather clear it though before buying as not to put pressure on myself once I do get a mortgage.

My query is, out of the two options I have available to me what one would be considered the best option.

1. I am saving money with the credit union and by this time next year I will have 5k savings established and hopefully 10k in the bank. Should I go with them for a mortgage (due to credit rating) and secure my current and future savings against the mortgage. Based on my calculations I would after 20 years have 48k saved up and could pay off the 130k mortgage.
2. Go via a broker and potentially be declined by a bank or other institution. I would however get a slightly better rate via bank but it would be maybe 1% better. This would mean I would end my credit union savings (or greatly reduce it) to show the bank my net income is higher. Credit union savings come off as a salary deduction and don’t show in my net wage.

I earn between 30 & 35k and think I should only go for a max 130 mortgage with 10k deposit.

Also, I have moved from my cash card account to a current account. Does this help with your credit rating? I noticed on Equifax they do report the money available in the account.

Any advice or things to think about would be appreciated.