Sub Prime Mortgages - Are they worth it?

ricardinho88

Hi everyone,

Just after some advice really.

Me and the lady are looking to buy a house relatively soon. The saving side of things is going pretty slowly, so I don't think we'd even have a sizable deposit together for a few years. The big problem is our credit reports.

Now to get a good mortgage, I know that you need to have a squeaky clean credit report - which is something we do not have. I had a couple of defaults from 2009 that were settled in 2011, and a default for a large loan from I think 2009 that was fraudulently obtained in my name which is still active as far as I know (I disputed it with Experian and Call Credit, but heard nothing back).

Also, we have been in disupute with Talk Talk recently which resulted in them passing a sum of money to a debt collection agency (completely needlessly, I wanted to settle my balance with them, they lied about sending me a final bill and passed it to debt collectors anyway). Now if I'm right in thinking, that account has now defaulted hasn't it? Problem is the account is in my Mrs' name, so now she has a black mark against her name too.

So that brings me to sub prime mortgages. Are they worth even looking at? I've done a bit of research, and as far as I can gather we'll need a massive deposit, usually over 30% which will take us forever to save. I considered waiting until the defaults dropped off my profile then looking at normal mortgages, but now my Mrs has that recent default, it has set us back years.

Well...there we are. Sorry if I seem naive, I know very little about mortages!

David_White

If you've had a default in the last 12 months a mortgage may still be possible, but you'd likely have an interest rate of around 7.5%.

Are they worth it?

Well, I guess it depends on how much you want a mortgage...

ACG

You would need a 15% deposit minimum if you have defaults registered in the last 2-3 years. Rates are going to be in the region of what David says.

You need to dispute any defaults with the companies involved not the credit agencies. Assuming they agree to remove them, you can then speak to the credit agencies to update their records.

As for the rates and worth it, again as David says it depends on you. I try to look at things in a pounds and pence way rather than seeing 7% and thinking arghhhh.

An £80k mortgage would probably cost you around £100-150 a month more for 2 years (£2-3k?). After that something more normal should be achievable.

A £250k mortgage is probably getting on for £500 a month more which seems a lot scarier in cost difference.

It will all come down to the figures, term of the mortgage and actual rates so do not hold me to those figures, I was just giving an example to show that its not necessarily the rate you should be concerned with but look at it from your bank balance point of view.