Help to make a house purchase in 2018 do-able

JLammy

I have a target of being able to purchase a property, house or apartment, by the end of this year. But, I know it will come with difficulties because of some outstanding debt and adverse credit history.

Some background info:
- Income: £45,000 (only just started this new job, which has 3 months probation period)
- Debt: £11,000, which is a mixture of bank loans and credit cards for a start-up business I have, and is only just about breaking even this year (I have taken £0 this year from the business)
- Moved back to living with parents, so minimal expenses in terms of rent, food and bills
- Credit history was Excellent prior to starting the business back in 2016, but it is now Poor. Needless to say, I somewhat regret!

The plan:
- Sell off business van, as it's no longer required, which will hopefully get me £4000 and should clear off some of the debt, bringing it down to £7k.
- Pay off the credit cards and loans by paying ~£2k a month, which should mean I'll hopefully clear off the debt in 4 months (by August, I should be debt free)
- Cycle to work instead of train, which saves £200 a month
- Save like crazy, as much as I can from August onwards... (Maybe open the Help to buy ISA?)

But this wouldn't resolve the poor credit history. Is there anything else I can do to improve my chances of achieving my target of securing a mortgage application and be able to buy a property by the end of this year?

Any advice is very much appreciated. I am genuinely committed and I really want to make this happen somehow!

cjv

If you post some more details about your adverse credit history, missed payments, defaults etc there are some kind mortgage brokers using the forum that may be able to offer you advice.

Best of luck.

JLammy

cjv wrote: »

If you post some more details about your adverse credit history, missed payments, defaults etc there are some kind mortgage brokers using the forum that may be able to offer you advice.

Best of luck.

Don't have any missed payments or defaults, but my credit card utilisation is pretty high (it was even higher a few months back, but I've been paying it off at £1300-ish a month, for the past few months). My credit rating has already improved since paying off as much as I can, and as quickly as possible, although it's still in the 'poor' area...

I have however had a few occasions where I mistakenly went over the credit limit (automated payment), which I paid back immediately and have since stopped any automated payments from coming out of the credit card.

tori.k

Nothing really to add, but I could have almost written this myself in 2016, we shut down a 15year business and started again from minus 16k luckily we manage to find low paid work from the off so managed to pay off the debt without effecting our credit files ( like yourself just high utilisation) and by May 2017 cleared the debt and saved a 15% deposit, we had an offer excepted in end of June 17 despite me thinking otherwise the mortgage wasn't an issue at all with a mainstreet bank, sadly the house fell through and it taken us to March to find another house we liked but just exchanged last week.
Clear the debt and it seriously wont be an issue.

ACG

If you have no missed payments/defaults/CCJs - you do not have bad credit.

You have a bad score according to whichever credit agency you are looking at, but that is as useful as a glass hammer. Get your deposit in place and the debt down if necessary/wanted and you should be fine. The lender will score you according to their own system, failing that there are non scoring lenders also.

JLammy

Thanks for the replies so far.

So I just checked another credit agency (experian), and my credit moved from being 'poor' to 'fair' in the past few months, since clearing some of the debt, and hence lowering my utilisation. Hopefully this will continue to improve over the coming months as the debt becomes a lot lower!

How difficult will it be for me to secure a mortgage with a new job? By year end, I should have been in the job for over 6 months and passed probationary (fingers crossed!).

I guess I should start opening a Help to buy ISA as soon as possible and throw in £1200 to start with and make use of the free 25%!

sammyjammy

You'll be fine with plus six months and passed probation. You need to stop focusing on the "score" the agencies are giving you, they really mean nothing particularly in your case.

Good luck!