Getting a mortgage after a history of debt

Financeadviceneeded

Hi MSE forum,

Just finished having an online chat conversation with Habito about potential mortgage application and have been left in an absolute panic so could do with some advice please.

To give some background, I’ve had quite a history of debt including credit cards and payday loans. At one point I was in excess of £35k over my head. This has now reduced to a more manageable £5,000 in credit card balances and an outstanding £5,000 loan (taken out to consolidate some high balance credit cards). This is continuing to reduce and should be cleared (excluding loan) by February 2020.

Purchasing a property is the next big step for me and something I was considering in the next 6 months of so.

All payday loans are now over 2 years old, no payments have been missed - on the credit cards or payday loans. I have no car finance and no major outgoings (kids, travel etc).

My partner and I have a combined income of £85,320, with an additional £12,000pa in bonus’s and overtime. We (my partner) have a deposit of £70.000.

Can anybody give me some advice on whether or not it’s likely we’ll be accepted for a mortgage, or if I should lower my expectations and assume I’ll have to rent for another 4 years until all PDL’s have dropped away from my credit record.

Habito advised it would be very hard for me to get a mortgage and we should consider either Natwest who (apparently) don’t mind previous PDL’s, and Accord (who I’ve heard are a bit of a ropey lender).

Any advice would be greatly welcomed.

Thank you in advance.

csgohan4

you need a broker who deals in adverse credit/ better broker and you will have an idea in how much you can borrow

habito are free and therefore you get what you pay for, they only want quick and easy cases to make money

Nebulous2

What's the breakdown of the income? Could your partner apply on his/her own?

What value of house would you be aiming for?

If there's £70k in the kitty and it is a partnership it might be a good idea to drop the debt, especially if you're paying interest on it. Those might be things to run by a broker though. I'd echo the suggestion above to get a broker who specialises in adverse credit.

Financeadviceneeded

It’s unlikely my partner would want to have a sole mortgage as his basic income is approx £37,500 + £6000 (overtime and bonus). Mine is the remaining £47,820 + £6000 (bonus).

Although if having me on there is going to be a major issue, we’ll have to scale back our expectations and go for a sole application.

House value of approx £350k is what we were looking at.

Thanks

ScottishSaver14

With so few major outgoings what's stopping you paying the debt sooner?

LRmortgage

I think this is very doable.
Find a local, independent broker and based on the info you’ve given I think this would be placeable.

Financeadviceneeded

Thank you. Really appreciate this.

Hopefully that will be the case. 👍🏻

Financeadviceneeded

ScottishSaver14 wrote: »

With so few major outgoings what's stopping you paying the debt sooner?

I’m paying off £1,200 per month from the remaining debt. Forgot to mention the overdraft I would also like to clear prior to any mortgage negotiations.

amnblog

Sounds to me like Habito are laying in on with a trowel here.

The outstanding debt is manageable on your income.

Provided you do not have defaults or CCJs and you are not in the habit of late payments you will have a number of options.

ScottishSaver14

. I’m paying off £1,200 per month from the remaining debt. Forgot to mention the overdraft I would also like to clear prior to any mortgage negotiations.

Is that an overdraft in addition to the loan and CC?

It's great you're clearing things at that rate, but with the greatest of respect that's a lot of debt and PD loan use for someone with a significant salary. In terms of mortgage lenders, they'll ask the same questions. However, as long as you can show that you're paying it down etc then like other posters have said it's not the end of the world. I'm sure a local broker would be extremely useful when the time comes!

katsu

Many years ago we had a deal from Accord and they were fine to deal with. No slower or more difficult than any other lender.

We got great benefit from using a broker as we weren't perfect borrowers either. We just went with recommendations for brokers from people who used the same ones. I recommend you use a good broker as it is well worth a few hundred pounds to get a decent mortgage rate. Hopefully family, friends or colleagues can recommend one? If not, look at the main site articles on mortgages for how to find a decent one.