First Time Mortgage: Credit rating

Undercovercarrot

Hi chaps and chapesses

Me and my partner are looking to buy a house around June next year. We both work full time with a combined annual gross income of around £45000. We are looking to get a mortgage for around £135K max with a deposit of around £13-15K. Our financial situation is as follows:

Me:
2x credit cards. Near max but pay off at least minimum every month on DD.
1x store card paid off in full every month.
1 loan for around £7000. No missed payments.
1 car HP for about £5800. No missed payments.
No arrears on any accounts. Only small thing is nPower made a !!!! up and thought I had defaulted on a payment to them.

Partner:
2x credit cards with about £100 on each. Has now set up DD to pay off min, but has missed a couple of payments (£5 payments) a couple of months ago due to forgetting.
In previous house share, British Gas accidentally passed his details to bailiffs as they thought he had defaulted, despite the account being closed and him being in credit! This was resolved straight away.
Nothing else.

We are both HSBC customers (me for 3 years, partner for 10), with a current a/c each and a joint savings account (for about 5 months) which we use to pay our bills with. We have also just opened a joint savings a/c with Northern Rock.

We have had a wee bit of adverse credit history in the past (3-5 years ago), but nothing major. No CCJ's/IVA's or bankruptcy. So, 2 questions:

1: do you think that there is anything that might cause us problems with a mortgage,

and

2: what can we do between now and then to improve our chances of being accepted and getting the best possible deal?

Ta!

Undercovercarrot

I should also add that I have moved 4 times in the last 3 years (no sinister reason) and my partner has moved twice in the last 2 years, prior to which he was travelling and working overseas for a year.

UK007BullDog

Well, First of all start paying off your credit cards and loans.

Any loans and credit cards outstanding will be taken off the yearly income hence you will not be able to borrow as much as you thought.

How much are your credit cards outstanding in total?

Undercovercarrot

About £1400 on one and £2000 on the other.

Expecting a lump sum IRO £3000 coming in within the next 3 months.

herbiesjp

You need to put down the total CC balances.

And also the figure that you pay each month to cover the loans

This will help to look at affordability

Undercovercarrot

OK:

My monthly NET pay is about the £1800 level (before any overtime).

Credit cards are as listed above.

I pay around £143 for the HSBC loan and £173 for the car HP.

herbiesjp

To cover the loans you will need to deduct £3792

To cover the CC (each lender uses a different measure) but say a 5% payment = £2040. However it looks like this may be paid off soon.



So you would be looking at just over 3 times you joint income (with CCs cleared) so you should be fine on affordability

What was the adverse history?

Undercovercarrot

So clearing CC's should be a priority?

As you say, it would be just over 3x our income. We'dbe tempted to go for an HSBC mortgage, as we are both customers with them. Obviously would probably still go through a broker though, just to see if we can get anything better.

herbiesjp

SHopping around is a good idea

See what HSBC will offer you and then compare to what a whole of market adviser can find for you

djbd1973

Have you thought about getting a free credit check? There were some providers a few months ago offering one months free trial and you could sign up, get your personal report and then cancel the service before having to pay anything. This may help you gain a picture of what mortgage providers would be seeing about you.

Good luck