Subprime Mortgage

timPgoodwin

My/mine and my partners situation is such,


We have a combined income of pretty much bang on 50K, we are looking to buy a 3 bedroom house with a budget of 170K and have been told we would be eligible to borrow around 200K with a 15% deposit which we have been given by my partners Mother.


Yesterday I went to see an IMA (independent mortgage advisor) here in York and was brought a list of potential lenders. However, when we were looking through my Experian Credit Report it shown a 'Default' debt dating back to 2011 (settled last month) for a phone contact to the tune of £609, it also showed a default for a personal computer for 2011 of £424 which has been paid.


The IMA then went ahead with trying to get us a mortgage in principal but to no avail, the most lenient lender - Skipton BS, stated they only accepted defaults debts up to a maximum of £500.


The IMA then stated we would be eligible for a 'Subprime Mortgage' which may ask for an interest rate of 6% and after he spoke to 'Precise Mortgages' they would be likely to accept us for a mortgage.


My question is, is it worth looking at a mortgage (2 yr fixed rate) with a higher % to get on the property ladder or is there other options? If so what?


Anyone else used Precise Mortgages or had a subprime mortgage?


The house in York are increasing in price so quickly that we are worried if we wait a year to get onto the property ladder we will be priced out, as our budget is tight as is.


Thanks
Tim

[Deleted User]

We are also only able to get a mortgage from Precise because of a similar situation with defaults. It will be quicker for us to suck up the higher interest rate for a couple of years and remortgage than waiting for the defaults to drop off (when mortgage rates may have gone up to what we're going to pay with Precise now anyway). But we can afford to pay the inflated interest rate, it all really depends on if you think you can afford it and if you'd be happy waiting another two years otherwise (which is when your default will be gone from your account).

scoops82

If one of you is a higher earner you might end up being financially better off applying in one name

timPgoodwin

scoops82 wrote: »

If one of you is a higher earner you might end up being financially better off applying in one name

Thanks for the reply, I earn £33,800 of the £50k but it is me that has the default, we could not get a mortgage on just my partners earnings unfortunately.

timPgoodwin

[Deleted User] wrote:

We are also only able to get a mortgage from Precise because of a similar situation with defaults. It will be quicker for us to suck up the higher interest rate for a couple of years and remortgage than waiting for the defaults to drop off (when mortgage rates may have gone up to what we're going to pay with Precise now anyway). But we can afford to pay the inflated interest rate, it all really depends on if you think you can afford it and if you'd be happy waiting another two years otherwise (which is when your default will be gone from your account).

I think our decision will be similar to yours, the new amount with the higher interest is affordable for us and we can trim unnecessary outgoings (Spotify, Netflix, National Lottery DD etc) that equates to half of the higher amount anyway so I think we may go ahead.


How have your dealings been with Precise so far? Do you find them easy to deal with?

[Deleted User]

We've only had the AIP so far so haven't actually started the application yet. However our broker has spoken to them a few times on our behalf to check various things and they've been prompt and informative in their response. Bear in mind they are a bit fussier than other lenders with regards to what sort of property they don't lend on- eg ex-council or above commercial property (lots of lenders are fussy on this too but Precise seem to be especially strict). They also charge a fairly whopping fee, but can put this onto the mortgage if you want. Our broker has advised when we do the application they can be slower than high street lenders as they go through everything with a fine tooth comb (which is fair enough, we're high risk borrowers!) and can take a while coming back asking for extra info etc.

amnblog

Bit confused by your original post.

Precise don't do 10% deposit mortgages. Have you the extra 5% deposit to get to 15%.

timPgoodwin

amnblog wrote: »

Bit confused by your original post.

Precise don't do 10% deposit mortgages. Have you the extra 5% deposit to get to 15%.

Apologies, I have amended my original post - We have a deposit of 15% - Thanks.

timPgoodwin

[Deleted User] wrote:

We've only had the AIP so far so haven't actually started the application yet. However our broker has spoken to them a few times on our behalf to check various things and they've been prompt and informative in their response. Bear in mind they are a bit fussier than other lenders with regards to what sort of property they don't lend on- eg ex-council or above commercial property (lots of lenders are fussy on this too but Precise seem to be especially strict). They also charge a fairly whopping fee, but can put this onto the mortgage if you want. Our broker has advised when we do the application they can be slower than high street lenders as they go through everything with a fine tooth comb (which is fair enough, we're high risk borrowers!) and can take a while coming back asking for extra info etc.

That all makes sense - We were sent an AIP from them today and the interest rate is 5.94% with £995 fees which can be added to the loan. We have decided to go ahead if we find the right house as according to our mortgage advisor we can re-mortage in 2 years and our default will be discounted due to the fact we have successfully managed a mortgage for 2 years and will be then eligible for the lower rates. Fingers crossed. Have you found out the fees for the solictors etc through Precise, are they the much higher that the normal?

tomtontom

No one can guarantee that you will be able to remortgage in two years - if you look at how the lending market has changed in the past two years you'll understand why. You need to plan for a worst case scenario, that you are stuck with the mortgage long term. Only if this is manageable should you go ahead.

timPgoodwin

I see, in what scenario would we not be able to remortgage? and yes it is affordable. We have a combined income of £52-£53k and the mortgage would be for £790ish