7% interest rate for first time buyer - need help!

rexelpink

Hi all, I am looking for some advice please.
We are looking into buying our council property.
We desperately need a 3 bed and cannot exchange, our only option is to buy the property we are renting and look to convert - this could be done for roughly 3k. (Builders in the family so I'm not concerned about that)

I've not got the greatest credit history and have about 11k personal debt, however we have a 40% discount which they will take as a deposit. We've had a principle agreement offer but at 7% and they won't cover the 11k we owe.
Monthly repayments are more than double our current rent. Which would be tight but we could do.
Broker has advised that we take the offer and in 2 years remortgage at a different rate. He seems to think that in 2 years our credit file will have improved. Time is not on our side, we are 35 and 41 this year.
But I'm torn..
I can't see how if the 11k is still outstanding in 2 years (no chance to pay it off in full with the new higher mortgage payments) our credit rating would improve, and if we should go for it or not.
Sorry if that doesn't make too much sense, posting in my phone - but I would really appreciate some views on this. Neither me nor DH have any experience about buying houses.

rexelpink

For further info, this is the details of the principle offer:

Property Value £300000
Discounted Purchase Price £196000
Mortgage Amount £196000 (this lender will not lend over)
Term 29 years
Rate 6.69% for 2 years
Lender Fee £0.00
Survey Fee £485.00 payable on application
Lender Admin Fee £120.00 = payable at the end of the mortgage term
Broker Fee £1995.00 payable on mortgage offer (reduced from 3%)
Lender TT Fee £35.00 payable on completion
Monthly payment £1283.08pm for 2 years

[Deleted User]

If you have debt and therefore presumably no savings, how could you manage a doubling of your property payments?

Where is that extra £600 going to come from?

rexelpink

DH was a carer for our son for a number of years but has been back in full time work for just over a year now.
Shamefully over that time we have not prioritised debt repayments, but the reality is that we could afford the extra (it's actually just over 700 more) now he is working.
In a year we could clear most of the 11k (I'm currently putting the extra aside every month anyway since the beginning of the year) but I guess I am worried that our ages go against us to do this.

rexelpink

Sorry should have been clearer, in a year at our current rent payments of £540 pcm we could clear the 11k

ashe

clear the debt and buy in a year?

Having no wiggle room and 11k in debt around your neck isn!!!8217;t going to bea comfortable Situation to be in

silvercar

Why rush? Why not continue to rent? What do you gain by buying now? Wait until your credit record allows you to borrow at a decent interest rate.

kingstreet

Consolidating the £11k debt into a right to buy mortgage isn't a lender problem. You simply can't borrow into the council's equity for such purposes, if for anything these days.

elsien

What does the interest rate do at the end of the two years, if you're not able to re-mortgage?

ACG

I know the lender and I think that rate is a vairable rate with no early repayment charges so rates could go up but you could potentially leave before the 2 years are up.

Having £11k debt is not necessarily a "bad" thing (obviously its not great).

Do you have bad credit and £11k worth of debt or do you just have £11k worth of debt which you think is bad? The 2 are very different. If you do not have missed payments/CCJs/Defaults etc then it is just an affordability issue, if you pass that then I can not really see a problem - and why you can not get something more mainstream.

Lauralou79

Don't be too worried about age you could spend a year or two paying down your debt/ improving credit history and saving and then maybe you could get a lower rate and/or less on your term. We were 38 and got a 25 year term last year. I've friends who got mortgages in their 40s too.