First Time Buyer Rubbish Credit Situation

gangaftaglee

Hello all - I wonder if anyone can advise me.

Me and my partner are first time buyers and have been looking for a while. We were refused a decision on principle by Nationwide in Oct (We were trying to lend £135000).
In January we were both terrified and delighted to find that I had fallen pregnant. Now we have a baby coming in September and we're feeling the urgency to get out of our expensive and not very nice rented property and move into our own home.

We lowered our sights and tried again early this month for an AIP from Yorkshire Building Society. This time we were asking for £110. Refused again.

My credit rating is 'Fair' and my partner's is 'Good' however he has had a payday loan in the past (about 5 years ago) - we were wondering if that's what's tripping us up. I now realise yorkshire building society was a silly move as they are known to be very fussy and we had some outstanding credit card debt of about £2000.

So we have tried to clean our act up and our current situation is we are completely debt free- all credit cards paid off. We're looking at even cheaper houses that are on the market for around £100,000 and we have begged and borrowed a deposit of £18000 plus an extra 2000 for solicitor/survey fees. Our household income is 37,500.

Do we have a chance of getting anything? Or should we just give up and look at it again later.

Thanks in advance for any advice

betmunch

Are you trying this yourself?


Are you just making applications and hoping for the best without finding out why the earlier one was declined?


If so you are making things worse!


Get a copy of your credit file (or all three versions for belt and braces) and take them to a good mortgage broker

ACG

Reducing the purchase price is not going to make a huge impact one way or the other - assuming your income supports it. The only effect that may have is how much you deposit works out to be as a percentage.

But I agree with the above, making applications without finding out the reason it was declined is not really going to help you. Infact it will be doing more harm than anything else.

Get all 3 reports (equifax, noddle, experian) and as suggested speak to a broker. If the pay day loan is the only issue there will be ways around it.

MrJB

I cannot recommending speaking to a broker highly enough. They will asses your income and wont make an AIP without being fairly confident (So long as you provide accurate and correct information) that you'll be accepted. Getting a rejection on an application which involves a credit search isn't good.

csgohan4

gangaftaglee wrote: »

So we have tried to clean our act up and our current situation is we are completely debt free- all credit cards paid off. We're looking at even cheaper houses that are on the market for around £100,000 and we have begged and borrowed a deposit of £18000 plus an extra 2000 for solicitor/survey fees.

So your deposit is not yours then? Solicitors will ask where the deposit is obtained from and the people who lent it to you may be asked to sign a form saying they have no interest in the property and don't expect the money to be paid back i.e. gift.

If you couldn't save up a deposit yourself, is it wise to buy a house when you may not be ready?

Why the rush for a house?

squidgychesspiece

The OP has already said that the rush is due to them having a baby on the way.

"Begged and borrowed" is an expression, doesn't necessarily mean literally borrowed (although it could be)!

Ugh, can't bear all the judgemental comments on here!! If you have nothing helpful to say....

Belloubec

Speak with a broker and let them do the work. You will have to pay but a good one is worth it!

csgohan4

squidgychesspiece wrote: »

The OP has already said that the rush is due to them having a baby on the way.

"Begged and borrowed" is an expression, doesn't necessarily mean literally borrowed (although it could be)!

Ugh, can't bear all the judgemental comments on here!! If you have nothing helpful to say....

Ouch, so your on your moral high horse now....


So if you have a baby coming you need a house you say????? even if it will put you into debt???


Expressions mean different to other people, we cannot read the OP's mind can we?


What is wrong with renting??


the fact the OP begged and borrowed allowing for expression means they struggled no?


You think it's ok now, try it when your a home owner and needing to pay for repairs for say a new boiler or a re roofing as a leaseholder?

Bamber19

csgohan4 wrote: »

Ouch, so your on your moral high horse now....


So if you have a baby coming you need a house you say????? even if it will put you into debt???


Expressions mean different to other people, we cannot read the OP's mind can we?


What is wrong with renting??


the fact the OP begged and borrowed allowing for expression means they struggled no?


You think it's ok now, try it when your a home owner and needing to pay for repairs for say a new boiler or a re roofing as a leaseholder?

Isn't that what it's all about?

squidgychesspiece

Yes, if you have a baby coming I can see why having the security of your own home would be preferable. The problem with renting is that OP does not want to rent.

Aren't most people who own a home in debt i.e. mortgage?

jamesd

gangaftaglee wrote: »

Me and my partner are first time buyers and have been looking for a while. We were refused a decision on principle by Nationwide in Oct (We were trying to lend £135000).
In January we were both terrified and delighted to find that I had fallen pregnant. Now we have a baby coming in September

That will reduce affordability and increase outgoings so the amount you can borrow now will be lower than it was in October, unless you make a misleading application that doesn't disclose the known facts about your situation.

gangaftaglee wrote: »

We lowered our sights and tried again early this month for an AIP from Yorkshire Building Society. This time we were asking for £110. Refused again.

Makes sense if they knew of the changed income and expenses situation.

gangaftaglee wrote: »

My credit rating is 'Fair' and my partner's is 'Good' however he has had a payday loan in the past (about 5 years ago) - we were wondering if that's what's tripping us up.

Five years ago should not normally have a big effect and given the age it might not even appear on his credit report. But if it does show, the more fussy lenders will just refuse outright to lend.

gangaftaglee wrote: »

I now realise yorkshire building society was a silly move as they are known to be very fussy and we had some outstanding credit card debt of about £2000. So we have tried to clean our act up and our current situation is we are completely debt free- all credit cards paid off.

It may be unfortunate that you have paid off all debts. Paying off debt has two effects: it decreases the amount you have for deposit, increasing LTV, which is bad, and it increases affordability, which is good. If you were limited by LTV not affordability paying off the debt made the situation worse.

gangaftaglee wrote: »

We're looking at even cheaper houses that are on the market for around £100,000 and we have begged and borrowed a deposit of £18000 plus an extra 2000 for solicitor/survey fees. Our household income is 37,500.

That should get you to the 85% and lower LTV band though a lender might make some deduction for the borrowed amount and repayment obligation on that. So risk to lender is lower than say at 95% LTV.

gangaftaglee wrote: »

Do we have a chance of getting anything? Or should we just give up and look at it again later.

You could try your own bank or banks if you have a longish history with them. They can look at your longer term spending records and see that you pay your debts and operate your accounts properly, assuming that you do.

It looks as though affordability is your limiting factor and to deal with that you'll need to lower your buying target to perhaps a flat rather than a house or to a less desirable or more out of town area. A broker could say more based on more detailed look at your finances and might be able to tell you the maximum likely amount that you can borrow.