Mortgage possibility.

JaneEyre

Hi there

I'm looking for some advice please. I am a first time buyer, hoping to buy a house using the Scottish First home Fund, but not sure if possible due to my credit history.  
I have an unsatisfied default of £310 from May 2017.  
I also have credit card debt of £3330 and a bank loan with £6500 outstanding, but which are being paid off monthly with no issues..  
I was hoping to buy a house around £140,000.  My Salary is £30,000 and I have a £10000 deposit, plus hopefully £25000 from the first home fund.  Does this seem possible given the restrictions on lending due to Covid?

Thanks

[Deleted User]

I'm not sure of the rules in Scotland but we were advised with our lender that CC is seen more favourably than Loan because with CC you can choose to pay a lower sum each month than you choose to. 
It's more on affordability etc and outgoings so I think it is possible especially with the first home fund as the loan from the bank would only need to be £110- £120k I guess but it's all the fees/legals that can eat into your deposit. 

JaneEyre

NixPB said:

I'm not sure of the rules in Scotland but we were advised with our lender that CC is seen more favourably than Loan because with CC you can choose to pay a lower sum each month than you choose to. 
It's more on affordability etc and outgoings so I think it is possible especially with the first home fund as the loan from the bank would only need to be £110- £120k I guess but it's all the fees/legals that can eat into your deposit. 

Thanks for your reply. I'm hoping that by the time I find a mortgage and then a house, I would have be able to save most of the fees.  Ideally the loan and credit card would be paid off, but living conditions at the moment are unbearable and we just need to move!

jamielutz1987

JaneEyre said:

Hi there

I'm looking for some advice please. I am a first time buyer, hoping to buy a house using the Scottish First home Fund, but not sure if possible due to my credit history.  
I have an unsatisfied default of £310 from May 2017.  
I also have credit card debt of £3330 and a bank loan with £6500 outstanding, but which are being paid off monthly with no issues..  
I was hoping to buy a house around £140,000.  My Salary is £30,000 and I have a £10000 deposit, plus hopefully £25000 from the first home fund.  Does this seem possible given the restrictions on lending due to Covid?

Thanks

Putting your details into the Halifax affordability calculator indicates that you may fall short of the required borrowing amount by a few thousand pounds.

Is there any reason why the default is unsatisfied given that it's a relatively small amount? I think lenders view satisfied defaults more leniently as compared to unsatisfied ones.

JaneEyre

jamielutz1987 said:

JaneEyre said:

Hi there

I'm looking for some advice please. I am a first time buyer, hoping to buy a house using the Scottish First home Fund, but not sure if possible due to my credit history.  
I have an unsatisfied default of £310 from May 2017.  
I also have credit card debt of £3330 and a bank loan with £6500 outstanding, but which are being paid off monthly with no issues..  
I was hoping to buy a house around £140,000.  My Salary is £30,000 and I have a £10000 deposit, plus hopefully £25000 from the first home fund.  Does this seem possible given the restrictions on lending due to Covid?

Thanks

Putting your details into the Halifax affordability calculator indicates that you may fall short of the required borrowing amount by a few thousand pounds.

Is there any reason why the default is unsatisfied given that it's a relatively small amount? I think lenders view satisfied defaults more leniently as compared to unsatisfied ones.

Thanks for your reply and posting the affordability calculator.  That's very helpful.
To be honest, the default was an oversight and I didn't realise it was there until I got my credit report. I thought I'd missed the opportunity to pay it off. I'll look into that now. Thanks. 

Lauren27

Hi, I'll be following this with interest, similar salary and looking for similar size of mortgage. Have a 5K loan. Undecided about whether to use the first home fund. Can I ask what credit report showed your default? I've done my credit club credit report which didn't show anything but I am worried there is something lurking out there. 

JaneEyre

Lauren27 said:

Hi, I'll be following this with interest, similar salary and looking for similar size of mortgage. Have a 5K loan. Undecided about whether to use the first home fund. Can I ask what credit report showed your default? I've done my credit club credit report which didn't show anything but I am worried there is something lurking out there. 

I checked the credit club report, clear score and credit karma (all free) and it was on all three of them. It's worth checking them all. Hopefully yours will be fine. 

JaneEyre

I just wanted to update this to let people know that I've tried 2 mortgage brokers and my Credit Union and been turned down for a mortgage by all 3.  I've now used some of my deposit to pay off the default and get my credit card balance down a bit (I've got it down to £1900 from £3330).

My plan now is to save for another couple of months to get my deposit back up and try again.  Is this sensible, or would I be best to forget about trying for a while and look at a private let until the default is off my file? 

Any advice at all on what I can do to make myself more attractive to lenders would be much appreciated.

lantanna

Also in same boat I have a default from 2016 this will be paid off by the end of the year. I’m saving separately for my fees, I’m hoping I can buy next summer instead of waiting for the default to fall off in 2022

lantanna

I’ve 2 credit cards, one is clear, used for groceries and paid in full every month. Other is £1000 balance which I’m working on reducing.