Obtaining a mortgage with history of missing loan repayments :(

Shea98

Apologies if this isn't in the perfect forum - I'm new to this website. So my situation is: I got a loan for £8000 at aged 19 for an operation and other medical expenses that I needed which were not covered by the NHS (don't get me started lol). I was paying £227 every month and would be doing so for 5 years. Flash forward to now and 2 years have passed but I have missed 10 months worth of payments as I got a financial ombismun involved and thought it would end in my favour. It unfortunately didn't and took way longer than expect to come to an answer. So I am now in arrears by over £2000 which has resulted in them cancelling my arranged overdraft on my student card which was at 0% APR and overdrawn to the maximum £2000. Today I have rang my bank and sorted the repayment out as I am able to make the monthly repayments and we have agreed I will reduce the balance on my student overdraft by £100 and have no fees. However, it will be on my credit history for 6 years that I had to enter into an agreement to prevent my account from defaulting. He said the didn't know what the effect on my credit would be but obviously it is not a good one. Whats worse is that although I am making the repayments on my loan and increasing them to 250 whilst my account is in arrears it will still appear as so and will continue to negatively effect my credit history I'm assuming immensely. I plan on clearing it with my student loan in September as I work full time at the same time as going to university so I can support myself without the student loan.

Sooo thats the entire dilemma I'm in. I am resolving it and I will get myself out of it with time and hard work but now I'm terrified about how its going to effect my chances of being able to own a house in the future. I'm 21 and graduating next year so I will (hopefully) find myself in a more professional work that pays more and has more opportunities and I do not want to be living with my parents for another 10 years and they definitely don't want that either lol. Just how bad is it going to make it for me, is there any hope of me buying a house by the time I'm around 25 if I do end up working my way up and get a decent paid job. Houses are lower prices than the national average round here. Is there anything else I can do so my credit history isn't so scathing when I apply for a mortgage? I will likely be trying to do the right to buy scheme which from what I've heard means there isn't as much emphasis on credit history anyway and I have had other lines of credit which I have fully paid off with no late payments (800 credit card and 2000 0% finance) but how much is my missed payments and in arrears going to hurt me?

Sorry this was SO long, I felt like I had to fully explain my situation to get some useful answers... Thankyou to anyone in advance for helping me out ! 

KatrinaWaves

Are you currently in a council or housing association property? You mention living with parents, so how are you going to use the right to buy scheme?

concentrate on paying everything in full and on time to increase your credit score. It’s not rocket science really. Borrow and pay it back on time. 

steampowered

The debts should only remain on your credit history for 6 years. It sounds like it is going to take you at least 6 years to save a deposit for a house anyway, so there is no problem.

There is no chance of getting a mortgage as a student. You generally only get a mortgage of 4.5 - 5x your salary. You will also need to save a 10% deposit (5% with help to buy). I don't see how you are going to save that within a year of graduation.

I don't know why you want to buy by the time you are 25. The average age of a first time buyer in the UK is 30.

Furthermore, buying when you are very young and fresh out of university can be a very silly thing to do for a lot of people. Buying reduces your flexibility and increases the cost of moving dramatically: (1) when you are young flexibility is really important to be able to move for a better job, (2) it is desirable to have flexibility to move property as you increase your income and savings, (3) you are using up your first time buyer benefits such as first time buyer stamp duty, (4) if you find a partner you may want to move in with them.

Shea98

steampowered said:

The debts should only remain on your credit history for 6 years. It sounds like it is going to take you at least 6 years to save a deposit for a house anyway, so there is no problem.

There is no chance of getting a mortgage as a student. You generally only get a mortgage of 4.5 - 5x your salary. You will also need to save a 10% deposit (5% with help to buy). I don't see how you are going to save that within a year of graduation.

I don't know why you want to buy by the time you are 25. The average age of a first time buyer in the UK is 30.

Furthermore, buying when you are very young and fresh out of university can be a very silly thing to do for a lot of people. Buying reduces your flexibility and increases the cost of moving dramatically: (1) when you are young flexibility is really important to be able to move for a better job, (2) it is desirable to have flexibility to move property as you increase your income and savings, (3) you are using up your first time buyer benefits such as first time buyer stamp duty, (4) if you find a partner you may want to move in with them.

I am 21 now so 25 is in 4 years so I'd be getting my debts cleared asap when I graduate then trying to save up my deposit afterwards. My main fear was just that id have a black mark next to my name for many years to come but 6 isn't so bad... thanks for advise:)

[Deleted User]

You'd be better asking them to backdate a default to the appropriate time.

Shea98

KatrinaWaves said:

Are you currently in a council or housing association property? You mention living with parents, so how are you going to use the right to buy scheme?

concentrate on paying everything in full and on time to increase your credit score. It’s not rocket science really. Borrow and pay it back on time. 

My bad, I meant help to buy scheme. The situation I'm in sucks and was in was largely unavoidable but luckily not the hardest thing to resolve. It seems this isn't going to haunt me for 10+ years to come which was my biggest concern. 

AdrianC

If you've still got arrears, overdrafts and loans, then you can't start saving - you're merely offsetting your debts.
If you haven't got sizable savings, then whether you can get a mortgage or not is academic.

Clear your debts and loans asap. Then start saving. If it isn't hurting your lifestyle, you aren't paying or saving hard enough. By the time you've saved enough for the equity and fees involved in buying, your credit dings will be history.

Thrugelmir

You've made a mistake. Learn from it. Move on. Keep your nose clean and you'll be forgiven.