Mortgage Planning

OneLife_OneShot

Hello, I plan in about 2 and a half years time to have apply for a mortgage.

I have one default that is satisfied 5 years ago and will be gone in May 2017.

About 3k of CC debt which will be gone by April (started snowballing correctly)

That is all my debt. My question really is when it comes to it how far back will lenders look in bank statements, I will hopefully have 2 years of no debts to look back on by the time I go to apply. There will be no payday loans or anything to see.

I know all lenders are different and have different criteria but I am just wondering from people's experience will they look more favorably at 2 years of being debt free rather than delve the full 6 years into my past which admittedly was not great.

The mortgage will hopefully be with my girlfriend, she knows the situation now but I do not want 2 years of good debt free work to be ruined by something that happened 5 years previous if that makes sense.

Any advice is appreciated because I will look to start saving once I am debt free and its kind of scary.:o

kingstreet

They won't care past three months ago unless it's adverse credit then it's upto six years.

The cost of debt is the issue and how it affects affordability. No debt, nothing to knock off so maximised borrowing power.

Adverse falls off your credit file six years after the event, not six years after it was satisfied.

You also don't need to east nothing but beans on toast in he run up to applying for a mortgage. Lenders aren't fussed about your irregular spending habits, just about long-term commitments you can't escape.

OneLife_OneShot

So once I pay my CC off by April 2017 and my default falls off in May 2017 it was registered in May 2011 I should be on a good path then?

By the time it comes to apply I won't have had any outstanding debt bar a phone bill for 2 plus years that is my plan.

I had heard horror stories of people not getting a mortgage cause of a PDL from 4 years previously etc.

kingstreet

Are you talking about not getting a mortgage full stop, or with a particular lender?

Lenders have their foibles and there are some you avoid for particular issues.

If you want to maximise your chances, start with advice from an independent broker sooner rather than later...

OneLife_OneShot

Haven't thought about who to approach yet I was just looking the advice that I won't be screwed on my credit history from a few years back really.

I think you convinced me that I won't

Startup1985

I too had a shady past with tons of overspending on top, paid the loans off and held back on unnecessary spending for a year and applied for a mortgage expecting to get turned down. They only asked for 6 months bank statements and we have been happily living in our house for a year now!

OneLife_OneShot

Startup1985 wrote: »

I too had a shady past with tons of overspending on top, paid the loans off and held back on unnecessary spending for a year and applied for a mortgage expecting to get turned down. They only asked for 6 months bank statements and we have been happily living in our house for a year now!

That is good to know! Hopefully one day down the line I can do the same!

Thrugelmir

conisme wrote: »

I know all lenders are different and have different criteria but I am just wondering from people's experience will they look more favorably at 2 years of being debt free rather than delve the full 6 years into my past which admittedly was not great.

Mainstream lenders will use algorithms to analyse the datasets available from the CRA's. So you need to meet the lenders own criteria. If your history shows improvement/clearance then this earns brownie points. In the context that the lender can see what type of potential borrower you are.

Bonfire_Bride

Lots of factors play a role...LTV has a significant impact. You can still get high street lenders with a default on file

getmore4less

Credit issues there are options and yours is far from the bad end, deposit & fees is the other big one where do you think you will be with ready cash to pay the bills and put a deposit down and what will your target LTV be.

if £3k is taking 6 months that suggests £12k saved 2 years after that + what the GF can muster.

will that be enough?

amnblog

A lot can happen by the middle of 2019. Who knows what the market will look like then.