Preparing for a Mortgage Application

LawAbiding

Hi,

Hoping for some guidance / advice, if you do not mind. But before my question, here are my circumstances.

Income: Basic £42,000, Overtime + On Call: £7,500, Bonus: Usually £2,500 (5%)

Partner does not work

Approx. 10k available credit via Credit Cards, Zero balances across them all.

Personal debt with Friend, being paid £400 per month.

6 defaults on Credit Report, Newest 2015. 3 of them due to drop off in the next year.

No late payments for over 6 months.

No credit searches for over 12 months.

I have been gifted a property by my dad which I plan to sell.

Property value £80,000, likely to get £75,000. Planning to put £60,000 as deposit. Remaining £15,000, pay my friend debt back and pay for the EA and Solicitor fees, plus any work the new house will need.

Looking at a property between £210,000 - £230,000. So would require a mortgage of £150,000 - £180,000. Would like this over 20 years, but willing to go to 25/30 years depending on monthly figures.

I local well reviewed broker has confidence that I could obtain a mortgage be it, slightly higher interest due to the defaults on my report.

First of all, what are my chances? Or is it better to wait and see what affect the defaults dropping of will have on my report before applying?

Is there any other prep work I could start doing?

i.e. bank statements, do they ask for like 6 months? Should I clean my statements up?

Should a consolidate my transactions from 3 debit cards to 1?

Thank you for any advice

getmore4less

Would the place be suitable to live in now?

where do you live now and what does that cost?

How much are you saving each month?

£400pm seems a low payment to the friend when you have £3kpm coming in

Are you ready for a £1kpm mortgage

Do you understand where you money has been going and why you have the need to borrow and can't pay things on time. 6 months is not that long to have been on top of things but may be long enough.

LawAbiding

getmore4less wrote: »

Would the place be suitable to live in now?

where do you live now and what does that cost?

How much are you saving each month?

£400pm seems a low payment to the friend when you have £3kpm coming in

Are you ready for a £1kpm mortgage

Do you understand where you money has been going and why you have the need to borrow and can't pay things on time. 6 months is not that long to have been on top of things but may be long enough.

Sorry for missing out the key details.

I currently live in the house which I am to sell, and pay my parents rent of £820 per month.

Savings each month is approx £300.

£400 is an agreed payment to allow me to keep my outgoing payments low for a potential mortgage on basis its cleared when I sell the house.

Yes, I have done all my maths, taking into account, higher Council tax fees, utility bills etc etc, and can afford an mortgage of upto 1k per month. On basis of clearing the debt owed to my friend.

Just 20 months ago, I was earning £20,000, then 8 months ago, I starting earning £32,000, now I earn over £50,000+, hence only 6 months worth of good payment history, I have managed to turn things around in the space of a year.

Thanks again.

getmore4less

why are you paying rent on a house you own?

On a house worth £75k, £820pm is a lot of rent 13% gross yield.

LawAbiding

The property was given to me by my parents, but they asked for a small proportion of the value. Hence the high amount being paid to clear the amount owed.

DD265

How much do you actually owe your friend and parents?

getmore4less

You missed this debt to your father in your first post.

LawAbiding

£10,000 to my friend and £20,000 to my parents.

Apologies, my parents have always called it rent and this has ingrained into me.

LawAbiding

I have two choices in regards to the money owed to my dad.

1. Pay it off from house sale, reducing the deposit by £20,000.
2. Continue to pay my dad monthly after moving, but reduce the monthly amount to £200-£200.

getmore4less

Any decent underwriter will query this house transaction and suspect this is loan and not a gifted deposit.

When was it put in your name you could hit the 6 month issue.

LawAbiding

getmore4less wrote: »

Any decent underwriter will query this house transaction and suspect this is loan and not a gifted deposit.

When was it put in your name you could hit the 6 month issue.

hmm.. i can see your point.

The land registry change is occurring in the next few weeks.

Might be better off getting the house transferred to me. Then waiting 6-12 months, and declare that I owe my dad the outstanding amount and the amount being paid, which I can also include paying off from the house sale.