First-time buyer with (extremely) rubbish credit: what are my options?

Borealis

Hi all,

Been a while since I posted here, but I'm a regular lurker.

Long post ahead so the TL;DR is: two-year-old satisfied CCJ, now in a solid financial position with no debts, quotes I am getting from mortgage brokers and solicitors are through the roof expensive. I don't feel like I have any options in this at all. Do I? Am I being an idiot even considering buying a property now?

As the title says, I have rubbish credit. This exclusively stems from a CCJ I received for university tuition fees while I was studying for my master's degree without a regular income and everything went wrong all at once. Long story, but anyway, this was two years ago and has been satisfied.

Since then, I have worked extremely hard to save up a 10% deposit, plus extra money for all the other costs. I have put in an offer on a place I love (two doors down from where I used to live) and I've had the offer accepted. (The original plan was to wait another year before looking to buy, but this place came on the market and I can afford it, so this is all a bit hurried for my liking, but there are so, so few properties in my area.)

I've contacted three brokers. One has said they can't help me, one has given me several options and the third (L&C) has yet to respond to my initial query and credit report.

L&C are free, so it would be fantastic if they could get in touch with me ASAP so I could get a mortgage-in-principle offer.

The other broker ordinarily charges £400, but because of my circumstances and the fact it requires a specialist lender I am being quoted about £1000 'for the extra work involved'. This seems like an unreasonably vast inflation in the cost, hence why it would be great if L&C could respond, which I've been told will be within two weeks. The quotes received are terrible rates, which is to be expected, but I figure I can remortgage as soon as my credit situation improves.

I am conscious I need to get the mortgage-in-principle to the agent as soon as possible or it'll go back on the market.

I'm already stressed about this. The solicitor recommended to me by the estate agent has quoted me a whopping £1500 for the legal work (on a relatively inexpensive flat). The £1000 broker has said they can recommend a solicitor who will probably be cheaper.

I'm not sure if I'm being taken for a ride here. I appreciate my credit situation doesn't give me a lot of wriggle room, but are the circumstances behind financial problems not taken into account or is it all black and white algorithms? I feel like, because of my credit situation, I am compelled to say yes to anything and anyone who says they can help. All of the specialist poor-credit lenders I've found seem to only go via brokers, and I've been told none of the mainstream/highstreet lenders will consider me.

Do I have options here or, if I want to get a mortgage now, am I compelled to simply suck it up and spend three times as much money as I would otherwise? My current tenancy is ending this month so I have to move, and the rental market locally is abysmal.

Sorry for the super-long post. I have to admit to feeling rather stressed about this and I'm trying desperately hard not to get my hopes up.

Thanks,

Borealis

quantumlobster

First up, £1500 is not whopping for the legal fees involved in moving. Make sure you have realistic expectations of what things cost. It's actually pretty reasonable.

Secondly, there is a quick route: spend money, as you've discovered.

If you want things to be cheaper, you need to take the slow route, building up a good credit score by (for example) having a credit card and clearing the balance every month.

Whilst there are human inputs into lending decisions, a substantial proportion of the decision will be made by a computer, based on the hard facts of your situation.

lumpyspaceprincess

I went to unbiased.co.uk and looked for bad credit specialist brokers in my area, as L&C took a week or two to get back in touch and tell me their queue for specialist advice was 3-4 months long.

If you've not already take a look on there and see what available in your area. Also from personal experience don't take solicitor recommendations from anyone already involved in the sale, find your own!

Thrugelmir

Investigating the cost of mortgages , solicitors etc should have been undertaken before you decided to buy. Your impulse decision has created the situation you find yourself in. No one is taking you for a ride. As others have suggested slow down. Build your savings further. Let your credit profile improve further. As time does heal. More doors will open in due course.

Nasqueron

quantumlobster wrote: »

If you want things to be cheaper, you need to take the slow route, building up a good credit score by (for example) having a credit card and clearing the balance every month.

History, not score. The score you are given by the CRAs is not real, no lender ever sees it, it's a bit like your horoscope, a novelty basically. Your credit history is what lenders use for their own internal scoring system that you will never see to prevent the score being gamed.


A monthly card use, paid off in full; basic phone contract paid monthly; stability on the electoral register etc all add up to a good history and allow time to heal the issue.



OP should save up for more of a deposit and allow the extra year or so from the CCJ to lessen the impact

Borealis

Thanks everyone for your replies.

Investigating the cost of mortgages , solicitors etc should have been undertaken before you decided to buy. Your impulse decision has created the situation you find yourself in.

You're entirely right, and this is exactly what I'd intended to do. As I said in my post, the original plan was to wait another year so my credit record had more time to improve and I could save more money.

The impulse decision was based upon the fact I have been seriously mucked around by tenancies over the past few years (like you wouldn't believe) and I need to find somewhere to live in July, and there is diddly squat locally - like, nothing within my budget and a sensible commute to work (including house shares). I search every day. I have been living out of a suitcase surrounded by boxes and furniture for six months in temporary week-to-week accommodation. It has not been fun.

This place came on the market and it was actually my parents who spotted it (I wasn't looking for sales), and they're keen for me to get on the property ladder ASAP, so I am being slightly pressured into it there. The place has development potential, is located on the same road I used to live on, well-within budget, etc. These opportunities are so, so rare.

So yes, parental pressure, but it is a good deal and unlikely to come up again, and with the way house prices are continuing to boom locally (plus lack of supply) doing it now is sensible.

A monthly card use, paid off in full; basic phone contract paid monthly; stability on the electoral register etc all add up to a good history and allow time to heal the issue.

I don't have a credit card, though I keep thinking I should. Everything else I've got, including a hire purchase on my car (just over a year old now). My credit score on Experian (and other agencies) has improved by practically nothing since the CCJ. Everything seems to revolve around the CCJ, which I appreciate is a big deal, but nothing else seems to be factored in.

I went to unbiased.co.uk and looked for bad credit specialist brokers in my area, as L&C took a week or two to get back in touch and tell me their queue for specialist advice was 3-4 months long.

If you've not already take a look on there and see what available in your area. Also from personal experience don't take solicitor recommendations from anyone already involved in the sale, find your own!

Thanks - I'll do this.

First up, £1500 is not whopping for the legal fees involved in moving. Make sure you have realistic expectations of what things cost. It's actually pretty reasonable.

Secondly, there is a quick route: spend money, as you've discovered.

If you want things to be cheaper, you need to take the slow route, building up a good credit score by (for example) having a credit card and clearing the balance every month.

In all of the research I've done so far £1500 seems to be right at the upper end of estimates, including here on MSE. It would, I imagine from a legal perspective, be a very bog-standard transaction on an inexpensive property, so I had figured it would be towards the lower end of the bracket. Between that and the £1000 broker fee I'm already at £2500. I can afford this (I have budgeted well, plus given myself a healthy pot for renovations), but it's still steep.

The slow route just doesn't seem to be an option. In the five years I've lived in this area I've already seen house prices nearly double (and where I'm originally from, and one of the reasons I moved, they've more than tripled in fifteen years). The place I hope to buy was sold six years ago for £60,000 less, and it's not in good decorative order. I wait another year and goodness knows what's going to happen. Bottom line is I can't save quickly enough to keep up so I just have to hope the market does a 2008 and goes belly-up!

I am leaning towards just spending the money, but I'll give myself another week or two to shop around.

AdrianC

Two years ago. Just two years... You got into financial problems, that you ignored right up until a court of law gave you a wake-up call and a slap around the chops. So... YOU EVENTUALLY PAID WHAT YOU OWED! Well done you...

Now, only two years later, you seem surprised that people aren't queueing up to lend you many tens of thousands of pounds over a timescale 15x as long as the just two years since you were in deep financial problems...

How odd. Who'd have thought it?

And, on top of your odd ideas about the legal fees, you "need" to buy now because your tenancy ends this month? Wow.

Fire_Fox

If this is a leasehold flat, it is not a bog-standard transaction. There is to-ing and fro-ing with the freeholder, not just with the seller and their solicitor. Oftentimes such transactions take months to complete.

By renovations are you meaning decorating, flooring and other superficial changes, or anything affecting the fabric of the building? Your reference to 'development potential' is ringing alarm bells. Flats are not houses, the rules are completely different.

Doozergirl

You won't pay more for a solicitor based on your credit rating, so you just need to shop around. When you add in searches, leaseholder packs and disbursements, Even the cheapest will be around £1,000. Make sure you pick someone decent and not just cheap because there is nothing harder work and more likely to collapse your purchase than an unqualified person when you're a FTB yourself.

As for the broker, well, the situation is what it is and if you have weighed up the cost of a more expensive mortgage for the next few years against the cost of renting (financial and emotional) and buying still wins, then it's positive, if at a higher cost than you hoped. We move forward - you're not in that horrid financial position anymore and that's something to be grateful for.

Remortgage when your rating improves and in the meantime enjoy owning your own home.

It's all in your frame of mind. You're not going to find the best rates right now, but you are taking steps towards ownership and that's great.

Doozergirl

AdrianC wrote: »

Two years ago. Just two years... You got into financial problems, that you ignored right up until a court of law gave you a wake-up call and a slap around the chops. So... YOU EVENTUALLY PAID WHAT YOU OWED! Well done you...

Now, only two years later, you seem surprised that people aren't queueing up to lend you many tens of thousands of pounds over a timescale 15x as long as the just two years since you were in deep financial problems...

How odd. Who'd have thought it?

And, on top of your odd ideas about the legal fees, you "need" to buy now because your tenancy ends this month? Wow.

That just reads as rude.

Humdinger1

Borealis

Just posting to say welcome. You're well aware that past actions weren't ideal, still less how you'd like to have acted, and want to rectify matters buying before prices rocket out of reach, from what I can see. I hope that doesn't sound patronising, it's not intended to be, but I'm quite saddened by the tone of at least some comments above. You're not the first one in this position; the boards are here to help; and to cap it all, you're a first time poster.

I agree with the poster above who suggested finding another broker specialising in adverse credit. It may take longer than ideal; on the other hand, the vendors will probably be aware that property isn't being snapped up within the hour like it used to be. From offer to moving in, even in sellers' markets, it's never been less than 3 months in all the times I've done it. That's with no hitches,everything running like clockwork, which is rare.

Good luck and keep us posted.

Humdinger1