Mortgages & Poor Credit History

JRP1414

Hello all,

I'm hoping someone will be kind enough to help us...

My girlfriend and I are desperately looking to move house to a better area. We are having lots of problems with awful neighbours and it is really starting to get us down. However, our current financial situation is not very straight-forward!

The house we are currently living in is in my girlfriend's name. It is a part-rent, part-buy home and she has a mortgage of £60,000 for 50% of the property. For the other 50%, she pays rent. Her mortgage repayments are £360 per month and the rent is £160 per month. She has been in the house for approximately 2.5 years.

I have moved in recently but up until then was living with my parents. I am 23yrs old, have no loans, no debts, no mortgages, and as far as I am aware a pretty good credit history. I have no significant savings. I work for the local council and earn £19,000 before tax.

My girlfriend's credit history however, isn't too good. She got into a little difficulty shortly after moving into the house and currently has around £36,000 worth of debt (besides her mortgage). She has arranged repayment plans with all of her creditors and is managing this successfully. All interest on the debt has been frozen and she is paying back the agreed amounts without a problem. She has paid her current mortgage religiously and has only ever missed one payment, which was due to a clerical error when she changed bank accounts. Her mortgage is being paid in full and is not subject to any defaults or payment agreements. My girlfriend is 29 yrs old, also works for the local council and earns £31,500 before tax. As with myself, she has no savings.

Ideally, we would like to move to a house priced around £200,000 - £230,000.

The questions we would like help with are:
- How likely is it that we could find a decent mortgage with our current situation?
- How does it affect the situation that technically I am a first-time buyer, but she is not?
- What do you recommend to be our best course of action?

Thank you for your time,

J & L.

MortgageMamma

your circumstances are not straightforward and you do need professional advice. How much equity do you think you will release from girlfriends current property when you sell it? knowing the amount of your deposit is very important.

JRP1414

Hi, thanks for your reply.

We think that our share of the property may have gone up by approximately £3-5000. I think realistically, we should be able to raise around £10,000 for a deposit (help from relatives, very limited savings, etc), but that would leave us with nothing for legal fees, surveys, etc.

Regarding professional advice, where do you think would be the best place to turn - financial advisor, mortgage advisor, CAB, etc?

MortgageMamma

The CAB may help you with your debts but cannot help with getting a new mortgage. A mortgage adviser, who specialises in mortgages (as opposed to a financial adviser who does a bit of everything) would be your best bet. You need to consider the stamp duty you would pay on your new property as well as legal fees. I think your budget is a little tight and affordability wise you need to set your sights on a much cheaper property, I would think no more than £180-£190k.

maninthestreet

Your girlfriend has (unsecured?) debts greater than her gross annual income. Even a monthly payment of only 1% of that £36,000 debt is £360.
Is this really the right time for her to consider taking on even more debt, even with your help? With no savings, how are you going to pay the costs associated with selling your current home and buying a new one?