Debts, Defaults & Mortgages?

PowerHandle

Hi, first post on this forum!
I'm trying to plan ahead with the intention of buying a house, hopefully in around 18 months time. I can't stay indefinitely where I currently live (rented shoebox) because of family considerations and location issues, but it currently just about serves its purpose. I'm in a good job, my pay will increase significantly by the end of this year from £35k and no overtime up to £47k-ish with good overtime potential (+£10k without flogging myself to death) and looking forwards all would appear to be moving in the right direction. 

However... steaming over the horizon in a blaze of misplaced glory is my financial past. 7 defaults in the first half of 2017 (major stress at a situation I found myself in caused a 'f... it' moment when it came to paying bills) and a mountain of debt that I am still paying off. 2017 I was in for over £50k, then I pulled my head out of my !!!!!! and started paying off debts, arranging payment plans either directly or with the usual mob of debt collection companies (NCO, Moorcroft etc). Slow process at first as I didn't want to affect my family's quality of life too badly, but payments have slowly been ramped up so that I've now got down to £26k, it would be less but I needed a decent car for work which added £10k to the bill in late 2018. No Bankruptcy, IVA or debt management plans, no CCJs. 3 defaults have been paid fully, 2 more will be paid within the next 3 months, and the final 2 should be gone by mid-2022. No payments have been missed since mid-2017, I've got two small credit cards (one with £0 balance, one at around 38% usage), 

I anticipate at the current rate of repayment by mid-2022 I should have around £7k of debt in my name (no 'old' debts, mostly vehicle finance), plus £4k in my partner's name (she has her own credit card with a £4k balance at the moment, around 40% usage), which is the target date for us to start our 'mortgage friendly' spending patterns in our current accounts to provide 6 months worth of good history if requested. 

Can anyone here please advise whether a mortgage company is likely to look favourably on an application with the above details? The defaults in my name will be 5y 6m old by the time we are looking to apply, my wife has a clear credit file but obviously has an association with me. The mortgage would be around £225000 with a 10% deposit (provided mainly from family), I'm fairly constrained as to where I can choose to live (for reasons I don't wish to expand on) so houses in the £230-250k bracket are what I have to look at. I don't want to keep renting as it's dead money. The Halifax mortgage calculator guesses with the above details that a mortgage around £235k would be possible but obviously it doesn't ask about past history or personal circumstances. 

Thanks in advance. 

K_S

@powerhandle Assuming that the mortgage market in mid/late 2022 is similar to today, and assuming your partner has some income, you should have options at 90% based on the limited info in your post.

PowerHandle

K_S said:

@powerhandle Assuming that the mortgage market in mid/late 2022 is similar to today, and assuming your partner has some income, you should have options at 90% based on the limited info in your post.

Thanks. My wife works, earning around £12k p/a. 

With regard to making ourselves look 'good' to the mortgage companies, I'm planning to set aside around £1100 per month (which should be around the sum of money the mortgage will cost) for the six months leading up to applying. Would you happen to know if mortgage companies prefer to see this just left in a current account or filtered off to a savings account, or does it not really matter?

K_S

@powerhandle It won't make any material difference. If you can avoid lots of funds moving between accounts in the months leading up to the application, it'll make the underwriter's job a bit easier and reduce the likelihood of queries and the associated to and fro.

PowerHandle

Time for an update. 

I started exploring mortgage options in December, and thanks to a bit of good fortune I’m in a better than anticipated situation, so I got in touch with a local mortgage advisor and asked him what my options were. He came recommended by close friends, but after initial contact and sending my details, he’s just vanished - no calls or emails answered. Fingers crossed it’s nothing serious, but it is a bit off to not even send an email along the lines of ‘sorry, I can’t deal with your case at the moment’. 

Anyway... yesterday I got an AIP from Halifax directly, which said I could borrow up to £212,500. It’s a little short of what I need, so I spoke to one of their advisors today. Turns out I can actually borrow up to £310,000 but the sting in the tail is that I must have a 15% deposit (I only have £25,000) regardless of the mortgage size I go for. Unfortunately properties around here are very few and far between at sub-£200k, certainly there is nothing suitable on the market today. The 15% rule is because of the past credit history, although I’ve been a solid on-time no missed payments person for the last 4 years now, and all my defaults are marked as Settled.

Can anyone recommend a mortgage company that might be more amenable to lending on a 10% LTV?

K_S

@powerhandle The most straightforward way would be to approach a different mortgage broker, plenty of fee-free ones in the MSE guidance here https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/#step3

If you don't want to do that then it's a matter of going down the best buy list, checking affordability calcs and running AIPs. If Halifax will lend you what you need at 85% LTV I daresay you *should* be able to get a 90% LTV mortgage with a mainstream/ish lender.