Ducks in a row but swimming down the wrong stream?!

rdchick

Hi all

so I normally post on the debt free wannabe pages as that’s where I belong but thought I’d ask here for mortgage advice

I am currently doing all I can to pay off credit cards etc so I can be in good stead to be accepted for my first mortgage in a few months…

backstory.. in 2016 I got a CCJ due to burying my head in the sand and not opening post. The CCJ falls off on the 13th June this year. I have paid off well over half the balance and it currently stands at £1700 and my normal contribution to this is £50 a month. I will pay off the CCJ because I now fully take responsibility for all that I owe. Is it going to be detrimental to have an outstanding balance on it even if it’s not on my file any more? But it is visible on my bank statements for the payments made each month.

then also I have a few payments to Lowell from past debts that have long fallen off my report and we’re in default. These are around £3k in total. Will they look down on me for having Lowell as a regular payment or will they not care?!

I’m hoping that by the time we look to get a mortgage, maybe August/sept time I will be credit card, overdraft and store card free and only have my car finance as debt (less than £5k now) and I’ve managed to pay off over 5k this year already so I’m in the zone!

I guess I’ve been so dogged by my debt that’s been with me the whole of my adult life (the Lowell debt is from poor choices and bad financial advice from Halifax from student overdraft back in 2010) that having the dream of owning my own home feels like a lifetime away.

More backstory, my partner and I have over £65k income combined, one child, he has had mortgages in the past (I was always just the lodger!) and we will have around £30k deposit (my parents are giving us 20k) and looking to borrow around £250k max (live on the South Coast)

if anyone could help I’d be so grateful!

K_S

@rdchick If your credit report is free defaults and CCJs at the time of application, and your recent credit history is clean, you should be fine.

Depending on how large they are, the debt payments remaining may impact your max borrowing (play around with a couple of lender affordability calcs to see if they do https://www.nationwide-intermediary.co.uk/calculators/affordability-calculator , https://online.accordmortgages.com/public/mortgages/quick_enquiry.do )

As long as the remaining debt is declared on the application, the payments showing on your bank statement should not scupper your application, though this may very based on the lender or underwriter you get, and the rest of the case. In any case, you or your broker could consider using lenders who don't ask for bank statements as a standard packaging requirement.

The main aspect to remember with respect to non-cc background debt is that what matters for affordability is the monthly payment, not the amount outstanding.

Overall, based on the limited info in your post, you should have access to normal mainstream rates.

rdchick

Thank you so much for replying!

So yes, my payments to everything are pretty small, the CCJ is £50 and the Lowell payments are £30 total, car finance is £189 a month and that’s about it for the ‘debts’ that I’ll have come mortgage time. We are thinking Sept as that’s when my daughter can get free childcare as at the moment I have £250 taken via salary sacrifice for her nursery days each month. 

I know you can get poor credit mortgages but I never wanted to tie my name to my partners financially while it’s still poor! The rest of my file is great, 100% repayments etc so hopefully it’ll be ok! 

Do most high street lenders ask for bank statements?

K_S

rdchick said:

Thank you so much for replying!

So yes, my payments to everything are pretty small, the CCJ is £50 and the Lowell payments are £30 total, car finance is £189 a month and that’s about it for the ‘debts’ that I’ll have come mortgage time. We are thinking Sept as that’s when my daughter can get free childcare as at the moment I have £250 taken via salary sacrifice for her nursery days each month. 

I know you can get poor credit mortgages but I never wanted to tie my name to my partners financially while it’s still poor! The rest of my file is great, 100% repayments etc so hopefully it’ll be ok! 

Do most high street lenders ask for bank statements?

@rdchick Other than a few lenders like Halifax that I can't remember ever asking for a bank statement, there's not always a hard and fast rule as it can sometimes differ based on the case specifics. For example for some lenders, the packaging requirements will differ based on LTV, type of income, etc.

It is also important to remember that if it does get picked up for full underwriting (not all mainstream applications do) the underwriter can ask for anything so there's no guarantee that a bank statement will not be asked further down the line.

rdchick

I’m not going to withhold any info but don’t want to apply and get laughed out of the building either! I guess it’s all based on affordability etc and that should be fine in the grand scheme of things! 

I just didn’t want my past to taint my future and more than it needs to!

Thanks so much for all your help! 

K_S

@rdchick Honestly, I completely get where you are coming from but from what I can see, you should be absolutely fine getting a mainstream mortgage in 6 months time.

Thrugelmir

If you've savings then it's worth considering clearing the debts and giving yourself a clean slate. 

rdchick

The savings arent mine if that makes sense, my parents are giving us 20k for the mortgage only and my partner has the 10k from the equity of our old flat. I have nothing to bring to the table because I'm still in the minus 😅 but yeah I get what you're saying and it makes sense to do that if I could!