Hoping to buy a house this time next year but I have adverse credit. Any advice?

Hi everyone. 

So background is me and my partner have been together 5 years. I’m not great with money, although am a lot better now. He has perfect credit but is self employed. My credit is currently at the higher end of the “poor” category with all of the agencies. 

I have around £7000 debt with numerous lenders which is all with debt collection agencies but I am getting this all paid off and will hopefully be satisfied by June next year. I do also have recent defaults. I have a CCJ from 2019. 

I am working hard to improve my credit and do not intend to have any further defaults. If I can manage this, am I going to be able to be accepted for a mortgage? I earn £28,000 and my partner is self employed and earns around £20,000. 

Thanks in advance and please no judgement!

Comments

  • Brie
    Brie Posts: 9,318
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    I would suggest talking to a debt advice person- one of the freebies - StepChange, CMA etc...   They can put together a budget for you and help you find the best way to pay down your debts in an efficient manner.  Alternative is to post a statement of accounts on the debt forum here and see what people might advise.  

    Essentially what you are aiming for it to get your debts as low as possible, your income as high as possible with a good few months before you apply for a mortgage.  Ensure as well that you are on voter registration asap.  The earlier anything is done the long your credit history will be looking nice and green.  (as opposed to having yellow warnings or red defaults).  Don't apply for any new credit.  This includes being careful about how you get car/house insurance renewals or new phone contracts.  I've seen credit histories where people are showing having 30 credit searches due to looking for a new car insurance provider.  I don't quite know how banks view these - to me they look desperate.  

    A lender won't be bothered about a low level of debt but will include that in their calculations on what you can afford.  A household income of nearly £50k might imply being able to afford a mortgage of £200k, maybe more.  But they will then deduct any ongoing payments for credit cards etc.  My last mortgage application was reduce due to the amount of credit card debt - which I quite understood.
    "Never retract, never explain, never apologise; get things done and let them howl.”
  • ACG
    ACG Posts: 23,622
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    When you say recent defaults, how recent? 

    Realistically, with 6-12 months clear you will likely be eligible for a mortgage but the rates will be higher and you may need a 25% deposit. If everything is over 12 months then you may have better options. 

    Get your credit reports over to a broker, they can give you an idea of what is available. 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Good on you for addressing your debts. Have you got a deposit or are you going to be able to save up in a year? 

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