First Time Buyers - Is it worth us even trying?

jedthehumanoid

Hi - just looking for some informed opinions regarding our situation. Currently privately renting a house for £600 per month and the landlord is looking to sell. We like the house and area so would like to make an offer but have a bit of a chequered credit history, mostly clean now but a few bits still showing when we've checked our reports. I have a default on Experian for £450.00 showing as 'settled' in July 2013 and has a note saying 'Debt Assigned' but not showing on my report with any other company. I've also got a strange one on my Equifax report from MyJar who have been marking a £180 debt as one month in arrears for 3 years. I'll be contacting them this week to sort this and paying it if needed. It looks like a final instalment was never taken for some reason but they've never contacted me and it doesn't look like any interest has been added, odd. My partner is in a much better position with no defaults/late payments etc. We're both on the electoral role and have been for the last 5 years or so at this house and our last one. We're both 33.


Our combined income is £33500 per annum and we have both been in the same job for a number of years. We can get a deposit of about £7500 together from savings and a gift from parents. We currently have around £5250 of credit card debt which is on interest free cards and the balance reduces every month. We've set monthly payment amounts so that they'll clear before the interest free period ends and we're not adding anything to the balances.


The landlord is having a valuation this week and I think it'll be around the £130000 - £140000 mark. A near identical house a few doors down sold for £126000 about 18 months ago. We're planning on going to see a local independent mortgage advisor in the next couple of weeks but I thought I'd check to see if it's even worth us making an appointment. Natwest gave us one of their 'soft search' AIP's for a 95% mortgage based on the house being £140000 but I think this will bomb with the issues on my credit reports. Any help is much appreciated, we'd rather not rent or move again.

SharkBite

Always worth going to see a broker. There are lenders and brokers who specialise in adverse credit.

stripedbanana

I'm no expert but I'd say it's always worth trying. Can you clear the credit card any quicker? We always assumed we'd struggle to get anywhere with a mortgage application (on circumstances not credit history) but got an offer pretty quickly from Natwest with no hiccups. If you don't try you won't know! But definitely see a broker.

enthusiasticsaver

I would definitely get that my Jar default sorted out. You can get a mortgage with adverse credit and yours doesn't seem the worst with just one relatively small settled default 5 years ago. You may be a bit tight on affordability though with £5000 unsecured debt and a fairly small deposit. Generally lenders like 4 times income which would go up to £134000 but they tend to reduce to account for existing debt. Some may go slightly higher.

It is certainly worth making an appointment but maybe with a broker who specialises in adverse credit initially.

jedthehumanoid

Thanks for the replies. I'll sort the MyJar debt out this week so it'll be cleared by the end of the month. I thought we'd be pushing the limit of what we could get but when we spoke to the advisor at Natwest they seemed fairly relaxed about the amounts and our current debts. The monthly payments on their illustration came out at around £595 so pretty much exactly what we're paying in rent - that was a 2 year fixed rate deal.


We could clear a decent amount off the credit cards, about £4000, in a couple of months as I'm due a bonus at work, not really until then though.


If the house we're in now is unaffordable would a broker give us a good idea how much we're likely to be offered? There are cheaper houses on the market which look ok and there's a new build development close by with some help to buy properties available advertised at about £130000.

the_quick

Mortgage broker should be able to tell you which lender most likely would offer you a mortgage and more less for how much. Don't hesitate seeing one, it will not cost you anything - even if he charges fee it will be on mortgage offer, not for initial meeting.

juniordoc

Definitely a good idea to get the credit card debt down before you apply.

jedthehumanoid

Thanks again everyone. Just a quick question, do you think I would be best using the bonus I'm due to pay off the credit card debts we or should I add it to our deposit? If we could get £12000 together as a deposit and look at houses around the £120000 mark would the 10% deposit make acceptance a bit more likely?


I know these are questions I'll ask the mortgage advisor, it's just nice to gather opinions.

enthusiasticsaver

I think if you can aim for a 10% deposit the cheaper deals will be available to you. Normally I would say clear the debt but if the debt is coming down anyway and it is all at 0% I think I would save your bonus and then see what the broker says about your credit card debt and what the difference is between 90% mortgages and 95%.

Mnd

Yes certainly try, you will spend forever thinking what if?

jedthehumanoid

Thanks again. One valuation has been completed and another is due this week, the landlord is then going to let us know but I'm not hopeful to be honest.


I'm starting to lean towards the Help to Buy properties that are down the road. They're advertised at £131000 for a 3 bed semi, so we have enough for the 5% deposit and then the £26500ish Help to Buy loan would leave a mortgage of around £98000 at 75% LTV.


Putting these figures into the mortgage calculator on here is producing massively reduced monthly repayment amounts, even on the higher rates I'd expect to be offered with the credit issues. This would allow us to overpay each month, build some equity and then hopefully remortgage a few years down the line to repay the 20%. The mortgage broker we go to see is going to earn their pay I think...