Payday loans and mortgages

catmac00

Hi,

So I know that payday loans negatively affect your credit rating.

I used quite a few last year (final one settled in September). I obviously couldn't afford my lifestyle at the time. Since then I have moved back home to save off debt (£4,000 in total) and got a new job with a £10,000 pay rise.

I want to buy a house as I have been left £20,000 from a relative. I intend to pay off the debt and save approximately £6,000 for fees, stamp duty etc and am aiming to begin looking at mortgages around August/September.

The question I have is with this have been long enough after the pay day loans (1 year) to look for a mortgage or am I just setting myself up for failure?

Any guidance would be great.

Thanks

csgohan4

What's your salary, house price you want?

catmac00

Hi,

Salary is £50K and house value I am aiming for is maximum £220-£230K, but will look at less if need be.

Im just concerned that my previous financial mishaps will stop it, even though by the time I apply I will have been a year with no credit applications/payday loans or anything adverse.

Thanks

ACG

You should be fine, im sure there would be options now but in September there will probably be more options.

Lemonsqueezer78

I'm glad that you have sorted things out - and got a £10k payrise.

But [without any judgement at all] it is a little concerning that you were using payday loans whilst earning £40,000... a pretty decent wage.

£10k increase in wages is about £500 a month better off, which sounds great and has obviously helped you clear your debts - helped also by being back at home. But even with that additional money, think carefully about things and make sure you really have addressed the underlying spending/lifestyle issues that led you down this path in the first place. And there are additional costs of home ownership that you will need to factor in. The additional money you now earn will disappear quickly, if you start down the slippery slope of regular overspending again.

catmac00

"I'm glad that you have sorted things out - and got a £10k payrise.

But [without any judgement at all] it is a little concerning that you were using payday loans whilst earning £40,000... a pretty decent wage.

£10k increase in wages is about £500 a month better off, which sounds great and has obviously helped you clear your debts - helped also by being back at home. But even with that additional money, think carefully about things and make sure you really have addressed the underlying spending/lifestyle issues that led you down this path in the first place. And there are additional costs of home ownership that you will need to factor in. The additional money you now earn will disappear quickly, if you start down the slippery slope of regular overspending again."

You are quite right! I got myself into quite a pickle to be honest, and hence why I moved back (i moved back in September) and am just saving really hard.

I completely agree with you, that I need to assess the issues. I want to make sure I don't borrow too much, so as I can comfortably afford the payments and also have savings away for any eventualities.

Fingers crossed, by the latter part of this year I will be able to buy my own place.

Thanks

savvysaver1

catmac00 wrote: »

Hi,

So I know that payday loans negatively affect your credit rating.

I used quite a few last year (final one settled in September). I obviously couldn't afford my lifestyle at the time. Since then I have moved back home to save off debt (£4,000 in total) and got a new job with a £10,000 pay rise.

I want to buy a house as I have been left £20,000 from a relative. I intend to pay off the debt and save approximately £6,000 for fees, stamp duty etc and am aiming to begin looking at mortgages around August/September.

The question I have is with this have been long enough after the pay day loans (1 year) to look for a mortgage or am I just setting myself up for failure?

Any guidance would be great.

Thanks

Hi, the first thing to do is to check your credit file. Noddle is free for life and will show up pretty much everything, including what your credit score is. That will give you a good idea if you will be given a mortgage or not. The OTHER thing is, have you considered complaining to the Financial Ombudsman about the Payday loan companies? IF for e.g. you borrowed continuously whether from the same, or different companies, then they can justifiably be complained about, and all charges and interest and interest on that total of 8% be refunded. In addition, it all gets wiped off your credit file. My son has been there, I complained on his behalf, and to date have a total of over £3500 refunded back. 8 companies down, 3 to go. Success with each one of them, and you can go back 6 years. You need to collect as much evidence as possible, as some of them don't give in easily, but then the Ombudsman makes a fair judgement on each one. Spread the word, and best wishes

savvysaver1

ps forgot to say, they do stay on your file for 6 years. If it's just a search, and no loan taken, then it's 12 months