Adverse credit- is it worth getting a mortage now

Elinobright

Can please have some advice please. I am a first-time buyer looking to buy a house. I will be purchasing the home with my husband. The main problem is that my husband has 6 defaults after going into a debt management plan.

The latest default was registered on the 08/02/2022 for £896 after the loan was bought by another lender who added the default even though he was under DMP. The rest of the defaults are between 2020 and 2021.

The debt management payment was settled in October 2022.

All the defaults have been settled. The total of the defaults was approx £8k.

We are looking at purchasing home in the range of £300,000 to £385,000.

Combined income is £85,000 plus bonus of approx £5,000.

We have 15% deposit to cover 300k to 385k.

We both work full time.

I have been reading through the product guides and criteria's of different lenders (adverse) and most lenders are more favourable 3-year defaults.

I want to find out, if will be in a better position to secure lower rates, if we have a higher deposit (20% or 25%) or had a 3 year default based on our circumstances? Any interests above 7% would too high for us.

ACG

The older the adverse and the larger the deposit the lower the rates. 
If you have already been looking at criteria/rates you should have an idea of what is possible. A 15% deposit is going the minimum you will get away with I think, although in the back of my mind there might be a little building society who would take a view but dont hold me to that. 

With normal rates at around 5-5.5% and adverse rates generally around 1-2% above that, you probably are looking at around the high 6% to low 7% marker. 

Speak to a broker though, you will have to to access those lenders, but you might have missed one or 2 of them. 

Elinobright

ACG said:

The older the adverse and the larger the deposit the lower the rates. 
If you have already been looking at criteria/rates you should have an idea of what is possible. A 15% deposit is going the minimum you will get away with I think, although in the back of my mind there might be a little building society who would take a view but dont hold me to that. 

With normal rates at around 5-5.5% and adverse rates generally around 1-2% above that, you probably are looking at around the high 6% to low 7% marker. 

Speak to a broker though, you will have to to access those lenders, but you might have missed one or 2 of them. 

Thanks for your response. The cheapest deal i have seen with 15% deposit is with Precise Mortage at 6.89%, if we reached the 2 year mark in feb 2024 with a default. 

I have looked at Buckinghamshire building society but I don’t understand there deals.

I have spoken to some brokers but most of them seem to be interested if you want to buy a house Now and won’t give advise freely.

ACG

You have an idea of what is available through Precise, I am not their biggest fan but they are indicative of what is available and the likely rates. You can see from their guide what will happen if you hold off and/or increase your deposit. But it is subject to change as February is a long way away in the current climate. 

I dont think Bucks will go to 85% for your current situation - but I could be wrong. 

Is there anything in particular you want to know? Your original question was a little vague and I feel like you have probably done enough research to be able to answer that question yourself... Its quite funny as a lot of the time I have customers who understand the adverse market better than a lot of brokers due to the amount of research they have done, although it is usually limited to their circumstances. 

Elinobright

ACG said:

Is there anything in particular you want to know? 

I think we really just wanted to see if there’s a lender out there who might be able to give us a more favourable rate than the 6.89 - 7% we’ve seen quoted. 

We’ve been looking at Precise’s long enough to see them completely drop some of their product classes 😆. And yeah, reviews are not particularly glowing. 

It seems like our options currently are to save for an extra year (20-25% deposit is in the realm of possibility) & the defaults have less impact in that extra year. Or hope that interest rates generally become more tolerable in the next few months. 

ACG

I think that is probably roughly where you will end up if you were to apply now. I dont think there is anything significantly below that for your circumstances.