Looking to the future

JKen_2

Hello MSE forums! A lot has changed and is changing for me over the last month/next few months and as the dust settles I want to plan for the future and hope you lot can help me as you have previously.


February this year me and my partner moved into rented accommodation and the last 6 months hasn't been easy. I went into things with a large car finance payment of 241 pound and around 4000 pounds of other debts, I have managed (just about) But my partner is missing the luxury's in life she had when she lived with her parents.


So the plan is we are going to move in with her parents and save a lot of money in outgoings from next month. This gives me a chance to cut serious chunks into my debt and our ultimate goal is to start saving for a mortgage! But my borrowing over the last 4 years has left me with a less than perfect credit file. I have never missed a payment and have No CCJ's or defaults (I have used a payday loan once and went over my credit limit recently by accident) I have it stuck in my mind no mortgage provider is going to touch me with a 10ft pole.


Recently I have been accepted by Barclaycard for a 5000 limit 24 month 0% card and have moved all debt aside from my car finance and a TV finance with about 500 pound left to pay which has left me in a position where I'm saving £60 a month in overdraft fees and interest.



So after a brief explanation of my situation what my question is to you guys is will it be possible for us to get accepted for a mortgage in around 3 years as a target? and what is the best way for us to reach that target? My mind-set is putting all the money I was paying towards rent bills (around 400 pound) towards the debt and clear it off asap then put the same kind of money into a help to buy Isa.

JKen_2

Also just to mention this site has been so much help to me, I have signed up to the credit club and only applied for the Barclay card as it was 90% approval on there. I moved over to Halifax this week and I am looking forward to £125 and we moved our joint accounts to M&S so we are also looking forward to a £125 gift card!

Debtslayer

Well done clearing and wanting to clear debts.
When you say your partner is missing luxuries in life that she had when living with parents, what luxuries? Holidays? Meals out etc?
How would things be when you have mortgage and bills to pay and if you want children in future? Mindsets would need to change otherwise you would end up in debt again if not careful

bexster1975

Hello

Well done on what you have achieved so far.

I few thoughts....

I'm not an authority, but from what you say I imagine it would be possible to secure a mortgage in three-ish years time. Of course much depends on what happens between now and then!

Honestly, in the first instance I would concentrate on getting debt cleared and start deposit saving.

Do you plan to live with partners parents for three years? If so, do they know this?

Also, will you not need to pay rent at partners parents? Or even bills?

I think saving most of bill money is a good idea. Maybe there are other areas to save in what you do. The alternative us earning more of course.

Finally for now, I wonder if yours and your partners ideas about money are quite different. If it's not happened before, maybe a bit of a " grown up" chat about money for the two of you might be in order.

Good luck

Bexster

enthusiasticsaver

I would check noddle to see what your credit score is so you know if there is anything may hinder you getting a mortgage in a few years time.

If you have filled the new card to £5000 you will need to pay £200 per month to clear it within the 2 year period. So presumably that plus your car finance will be swallowed up by the £400 saving. A help to buy isa is a good account to be saving in and a regular saver maybe.

I wonder if your partner also needs to be a bit more realistic about living independently. Very few people start out living a life of luxury. Her parents will probably have had to struggle when starting out and so will you. She needs to get onboard with that. If her parents don't charge rent then you should save that money too. Before my daughters moved into their own houses I suggested they calculated what the mortgage, bills etc would come to and saved that for a year when living with us so they knew they would be able to cope on that income/expenditure.

JKen_2

Thanks for the replies!

@Debtslayer, to be honest, you are spot on my partner is all about holidays, meals out and expensive fashion/makeup. Normally she goes on holiday 2 times a year with her family. I don't really do holidays I would rather spend the money on something else. but that's not to say I don't waste my money on things I don't need.

@bexster1975, We are going to pay around £100 each to her parents but that still works out about 350 -400 pounds a month saved. Both I and my partner know we want to buy a house together but I need to get my debt sorted before we can seriously think about saving up. in the mean time, she has agreed to start paying a smaller amount between 100-200 a month into a help to buy later this year. and when I clear my debts in 1-2 years I will start contributing 300-400 a month

@enthusiasticsaver, I haven't checked noddle but I have seen my Experian score through the credit club. I was already paying just under 200 for overdraft fees, and payments on the debts before I put them on the new card. so that shouldn't be a problem. I take on board we will have to have a discussion about spending but we have the same goals in mind.

My salary is around 17500 but I can do over time most months and boost my pay by around 200-300 quite easily by picking up some weekends or evenings. Also if the same as previous years I will be looking at a 1300-1500 bonus in March.

One of my main regrets is signing up to a new PCP on my car, I was paying 130 on a fiat punto and on my 2nd annual service one of the guys there pulled me aside and started going through getting a new car and ended up signing up for a new car which costs me 241 a month for another 4 years. I am interested in giving it in as soon as possible, I did see somewhere about early termination of car finance but I don't know how that works, I'm only about 15750 into an 18000 PCP contract.

All help is appreciated!

JKen_2

I have been looking into voluntary termination of my pcp contract and I have some more accurate numbers. The original amount including interest is 17250 and I currently am at 16058 it is my understanding I will need to have paid off around 8650 to be able to be considered for a voluntary termination. this will take near 3 years to achieve.


Its really annoying me as its taking up around 1/5 of my monthly income. I will have to deal with the consequences of what I have signed up too unless there is anything I am missing?

enthusiasticsaver

Unfortunately these PCP deals are expensive to get out of. I truly think they are one of the worst ways to buy a car unless you have a lot of monthly disposable income or travel a lot for work and get a private car allowance.

JKen_2

Yeah I am starting it realise that now! hopefully by the time it ends I will have everything in place for a mortgage and will have to buy a cheap run-around.

National_Debtline

Hi JKen

PCP is a type of hire purchase agreement and it is possible to terminate it. The rules state you will be held liable for 50% of the original agreement minus the payments you have already paid. Bear in mind you can be held liable for any damage beyond normal wear and tear, and with it being PCP there can be additional penalties depending on the mileage you have done.

Essentially you need to read the terms and conditions of your agreement to find out the costs of terminating the agreement. If you have already paid 50% of the agreement then the costs may be fairly low, but if you are yet to reach that point you could be left owing a lump sum of money. If you can’t afford to pay that in one go, it could have a negative impact on your credit file (important if you’re applying for a mortgage). Good luck with it all.

Susie
@natdebtline

JKen_2

Thanks for your reply Susie, as above I'm nowhere near the 50% but I can afford the payments, they are just higher then I would like them to be. To be honest it will be close to the end of the 4 year deal when I will reach the 50% paid mark so it may just be best for me to ride it out. I don't want to do anything that will harm my credit rating.