Clearing Overdraft VS Money Management

BaHu67

Thank you for your advice.

I have opened the LISA with just £5 (the account needs to be open for 12 months before you can claim the bonus, so wanted to do so ASAP - wishful thinking i know, but just keeping options open.)
I will not be paying any further funds into it until the rest of the debt is clear.

In two years I will have around a 15-25% deposit for a small property in my area.
I am lucky enough to be currently living with extended family which means a fairly cheap cost of living for me and also some further financial support for them, however this arrangement cannot last forever and certainly not six years until my credit file is gleaming.

Do you think this deposit and two years of excellent financial management would be enough to secure a mortgage?

EssexHebridean

Honestly, I'd be inclined to say take things as they come to an extent. The more deposit you can have, the better obviously as it leaves you with a better LTV which in itself going to mean a) a better rate option and b) if you DO end up on a higher rate than you'd ideally like, at least you've got less of a mortgage to be paying. If I were you I'd grit my teeth and aim to sit tight a little longer than you're planning, until you get stretch to 30% deposit. When the time comes, approach your bank in relation to a mortgage first - they know and can see your history and also will be able to see how you've pulled things back. However also visit a broker and see what deals they can pull together for you - it pays to have lots of options to explore.

I'd love to say "Yes, in two years it'll all be lovely!" but that may not be the case. I truly wish that more people out there understood the damage that payday loans, in particular, can cause. Please shout this one from the rooftops to any friends you may have who are at a similar stage of thinking about wanting to buy, but may also be tempted along the PDL path.

BaHu67

I so wish I could turn back time to understand the impact they would have, I naively thought they would improve my credit score (which they did), but didn't realise the impact they would have on my credit file to potential lenders.

I don't even have anything to show for them, other than expensive trips away and holidays that I could never afford, but didn't want to be left out. It's a dark trap.

Thank you for your honesty, it certainly puts things into perspective for me.

EssexHebridean

It's an issue that desperately needs more education, in my view. There are undoubtedly thousands of others out there like you - or worse in that they still aren't aware now, so the situation continues to escalate.