Pay off debt or save for mortage deposit

Jvj24601

I'm throwing away hundreds every month in rent. I'd really like to get a mortgage but I have some historical debt from 2014. I haven't paid anything off since then.

When I got my finances back in order I decided to save for a mortgage deposit. My question is pretty straightforward:

IF, in two years (2020) I had a choice between settling my debts and having no deposit or having a 10% deposit (because I hadn't paid off the debts), which would give me the best chance of getting a mortgage?

Debtfreewannabme

Is the debt on 0% interest? We had the same dilema until lots of others Martin Lewis included all agreed that paying debts off made the most sense. We are now almost debt free and going to be able to start saving for a morgage alot quicker and get a great morgage deal because we have more spare money after bills as none of it goes to repaying debts. Good luck with whatever YOU decide x

System

if the debts havent been touched since 2014 and you manage to get away with not being chased or getting a ccj before 2020 then the debts should drop off in 2020. Is there no way you could pay some of the debt and save some money?

Ive been umming and aahing about the same thing the last few months. Ive decided to pay off the debts and put off the mortgage for a year until my credit report looks better. 4 defaults will all drop off soon (2 april and 2 december) so i will be left with a 4 year old ccj by then which will also be settled. I could have gone for the mortgage now and kept the debts but they look awful and would mean paying out a much higher premium because of them.

Jvj24601

Thanks guys. No. For whatever reason they just haven't been in touch. I'm able to save about £300 a month after bills etc so I'm just not sure what's the best way forward. My only goal is to own my own house asap. I'm absolutely done with renting. I'm really good at managing my finances. I have a regular income. I just need to find the best way forward.

I have about 10k of debt from 2014.

January2015

Have you checked your credit files to see when your debts defaulted? If they defaulted in 2014 you are only 2 years away from them being statute barred and having a clean credit file.

Jvj24601

Yes I looked it up. One is Feb 2014 and other is Dec 2013. What needs to happen for it to be statute barred?

Jvj24601

Does statute barred mean a clean credit file, though? Or does it simply mean that the debt is not enforceable but stays on your file? if the latter then couldn't a statute barred debt cause problems getting a mortgage?

Windofchange

How sure are you these debts have just disappeared? 10 grand seems like quite a lot of money for someone to just forget about! Have you moved address and not told your creditor(s)? If this is the case then as long as they can show that they have tried to contact you then the debt is still very much enforceable. I think it is quite common as well for creditors to initially send a flurry of letters, and then nothing for a few years before selling the debt on or picking it back up again.

Statue barred in my recollection is different to defaulted. The statute barred bit is just that they can't chase you anymore. This is different to the actual default. I would imagine you are playing a pretty risky game here. If it was a mainstream lender I cannot imagine they have just forgotten. That isn't how they make money. Something else is going on - you've moved etc etc. If they have been chasing you and take you to court then you can pretty much wave goodbye to a mortgage.

Windofchange

Oh, and to answer the initial question, seeing as 100% mortgages are a thing of the past, then you are going to need a deposit. This therefore means that in your case I would keep the debt and pay off the mortgage. Seeing as you seem to have defaulted on it it may all be academic anyway as the bank isn't going to give you a mortgage in the first place.

John-K_3

Jvj24601 wrote: »

I'm throwing away hundreds every month in rent. I'd really like to get a mortgage but I have some historical debt from 2014. I haven't paid anything off since then.

When I got my finances back in order I decided to save for a mortgage deposit. My question is pretty straightforward:

IF, in two years (2020) I had a choice between settling my debts and having no deposit or having a 10% deposit (because I hadn't paid off the debts), which would give me the best chance of getting a mortgage?

You probably should not be able to get a mortgage either way.

No deposit should rule you out, but so should unsettled defaults.

It is not clear how you can say that you have got your finances in order of you have defaulted debts, can you give some more information?

Jvj24601

Thank you for your replies everybody.

- How sure am I that it has been forgotten about? 50/50. If it makes more sense not to pay it off then I won't. If it makes sense to pay it off, I will. Hence my questions.

- As I understand it, a 25% deposit will pretty much secure anyone a mortgage, even with defaults, as long as no CCJ / bankruptcy. This could be BS, though - hence my questions.

- I have my finances in order in as much as I am paying all my other bills with plenty leftover each month. I now need to decide whether or not to use the surplus to clear these old debts or if there is another more prudent use of it, such as saving as much as possible for a hefty deposit to ensure I can get a mortgage.