New mortgage with a shaky credit history - advice please.

Zulu_Dawn

I am looking for advice from people who have been through a similar situation.

A business venture (!) went wrong leaving us with substantial unsecured debt. I am now on a DMP and paying this off monthly and have met all obligations under the DMP. In terms of our credit record, there are defaults on the file from CC companies but no CCJ's. We have continued to pay the mortgage throughout on time etc.

We have substantial equity in our house. We are therefore proposing to sell the house. We will then be able to clear all our debt leaving us with a decent deposit for a new house.

Our hope would be to put down a 25% deposit on the new house and borrow 75% as a new mortgage. The mortgage would be at a similar value to the one we have now and would represent around 3 times our joint salaries.

I feel this should be fine but would be interested in other peoples experiences. Clearly the whole thing becomes a waste of time if I have to borrow at exorbitant rates or I will not be able to get a mortgage for six years. I am also slightly wary about approaching banks at this stage as I don't want to jeopardise our existing arrangements.

Thanks very much in advance

ZD

Hoario54

Gaining a new mortgage under the circumstances you describe shouldn't be an issue, however you will probably be classed as a Sub Prime applicant and the rates on Sub Prime products have been raised significantly over the last few weeks.

GMAC, one of the largest lenders in this field have Sub Prime rates that start @ 7.25% just to give you an idea.

I would make an appointment to see a Whole Of Market mortgage broker to get some ideas on costs before deciding the next step.

Remember, tell them everything about your credit history so that they ensure they quote you on the correct products!

Good luck.