Bad Credit Mortgage

Northernpauper

Hi All,

Just looking for some advice really as I am desperate to buy my own house. I am on track for hitting an £8000 deposit in July for a house that is worth £60,000.

I have been using some bad credit mortgage calculators and am getting quotes of 2% initial rate rising to 5% after 2 years. I have inputted that I have arrears and defaults showing on my credit file and this is the rate quoted. I'm just finding it hard to believe that they are realistic and if it is even possible to secure a mortgage with my credit file.

I have 3 defaults on my file from last year all around £300 and fell behind on my credit card payments and was over limit by £400 for the last 6 months of 2015 and 3 missed payments. I lost my job for 3 months and incidentally my partner! Along with her income.

Credit cards are now all clear I have 3 which I am just putting £10 per month and paying in full.

My income is 16250 at the moment but I am forced into the unenviable position of living out of my mums garage! At 28 this is the last place I want to be but simply can't afford rents which start at around £500 per month. The mortgage would be 250 per month rising to 300 after the initial period for a much nicer prop.

I hate the thought of waiting 6 years to buy a house!

Your insight would be appreciated!

Regards,

A northern pauper.

amnblog

Your caution is well placed.

Expect to up your deposit or let your recent credit record run clear.

In all likelihood you wont have to wait 6 years, but you will have to show you are now in control.

ACG

With default last year, its likely you would need a 15% deposit and rates would be around the 6% mark. That could be a little OTT if the defaults are for £20 and for mobile phones but I think 2% is probably unlikely - although your not a million miles off on the deposit front.

The other potential issue you may have is the purchase price, it could be a little low for some lenders - although I am sure it could be overcome with a 15% deposit.

csgohan4

ACG wrote: »

With default last year, its likely you would need a 15% deposit and rates would be around the 6% mark. .

Ouch eye watering interest rate, which more than double mine

Time heals most things including your credit history, wait it out

Northernpauper

What sort of deposit level would go a way to remedy my credit file on a 60k house?

I am able to save £800 per month in my current situation. But my sanity can't hold out for longer than another year. I need a new girlfriend/life! I have £4000 as of today.

Northernpauper

Sorry your replys came through whilst typing

Northernpauper

Thanks for your insight. 15% is definitely doable. I'm not to bothered about a high interest rate at the moment as I am completing my teaching qualification in the next 2 years that will see me get a 25k tax free bursary to become a maths teacher! So I was hoping to use that to repay a chunk of the house.

Even at 6% the repayments would be 100's less than the saturated rent market where I live.

ACG

It really depends on the detail of the defaults. I would say get your reports infront of a broker. 6% on a £40-50k mortgage will not have a huge difference over say 3% in a £s sense but its always best to see if you can get on with a normal lender at normal rates from the outset.

Grab a broker and there should probably be options.
I do not know of many lenders who will accept a bursary as an income so combining defaults with a bursary might just be too much for most lenders. If you have an income on top then I would like to think there will be options.

[Deleted User]

We have recently secured a bad credit mortgage- I have a settled default for £600 from October 2014. We are getting 6.99% and needed a 15% deposit. You will need a broker who specialises in bad credit mortgages, they can look through all 3 versions of your credit files and advise what is best for you.

amnblog

[Deleted User] wrote:

We have recently secured a bad credit mortgage- I have a settled default for £600 from October 2014. We are getting 6.99% and needed a 15% deposit. You will need a broker who specialises in bad credit mortgages, they can look through all 3 versions of your credit files and advise what is best for you.

One default - not three

Thrugelmir

Northernpauper wrote: »

I have 3 defaults on my file from last year all around £300 and fell behind on my credit card payments and was over limit by £400 for the last 6 months of 2015 and 3 missed payments.

Appreciate that life hasn't been easy for you. Bad credit history is one matter. A poor risk is matter entirely another. If adverse lenders have to conform to responsible lending. You need to focus on getting yourself sorted out financially. Mortgages are long term serious commitments.