Pay off debt or save for mortage deposit

Windofchange

So who is the debt with? Is it a major high street lender or is it with some backstreet loan shark? I don't think that anyone can really advise you. Whether or not whoever it is will come looking for their money is anyone's guess. I just simply don't believe you that you stopped paying one day and then nothing has happened since. It just doesn't work like that. So, you have done something or other to ditch the debt / hide away from it. It is therefore a question of whether the companies are likely to invest the time in tracking you down and trashing your credit history. By the time you find the answer to this out, they may well have already tracked you down and trashed your credit history, in which case you will not get a mortgage.

You also need to consider that at some point you are going to need to sit down and have your finances very closely investigated by the underwriter. They will also be asking questions such as whether you know of any reason your circumstances may change in the future. Not telling them about a hidden debt that you are trying to escape from will at best mean you get declined, but at worst see you the wrong side of a mortgage fraud investigation. As per a previous post, if the lender has been actively trying to contact you about the debt then the clock is very much reset. If as I suspect you have moved address etc, then the lender will be able to produce letters sent to an old address that will mean they can very much still prosecute you.

How much any of the above worries you is your call. I am going through the process at the moment of getting another mortgage and things have certainly changed since last time. They are digging very VERY deeply into my accounts.

Happier_Me

When do you actually want to buy a property? Now? Or in two years when the defaults fall off? By all means look into getting a mortgage but my initial thoughts would be to save, save, save with the aim of using this for a deposit when you're defaults drop off. If the debts start being chased before they are statute barred you have a lump sum available to negotiate final settlements. Not sure how this affects you're credit rating though!

Jvj24601

@windofchange

The debt is with a major bank. I'm 90% sure that I was in comms with them at my current address, but there is always that chance. Thanks for sharing your experiences re getting a mortgage. It has helped me to come to a decision.

@happierme

I have just logged in to share that I plan on doing exactly that! It looks like I will need at least another 12 months worth of accounts after going from S/E to Ltd so I'm going to use that time to save. My savings will include a portion set aside to clear the old debts IF they are an issue, which it sounds like they could be. If not then that's a bonus and I have extra for a deposit but at least I'm covered if they need paying.

enthusiasticsaver

If you have defaults showing from 2014 you will need to wait until 2020 for these to drop off anyway. I would check MSE credit club, Noddle and clearscore to make doubly sure you know what is showing on there.

I would then save as much as you can providing there is nothing since 2014 as having a large deposit will certainly help you get the best mortgage deal. Underwriting mortgages is certainly stricter these days so getting your finances as squeaky clean as possible will help. If you are SE or own a Ltd company this will be harder. I am not sure you are correct when you say a 25% deposit will get anyone a mortgage. It may well do but not necessarily at a good rate.

fiisch

Jvj24601 wrote: »

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?

The obviously answer is having a 10% deposit - if you had 0% deposit, you won't get a mortgage (post credit crunch 100% mortgages do not exist).