Is it possible for me to get a mortgage?

rondixon1967

Hello everyone.

During previous financial difficulties, I experienced some defaults around 2019. The last of these drops off in May 2025. I have always been working to that date in terms of applying for a mortgage.

However, due to my current circumstances, I am now looking for somewhere else to stay, which means do I rent or do I buy?

I know that even if I could get a mortgage the rate would be terrible. But if I were, how soon after May 2025 could I typically re-mortgage and get a better rate? Is a mortgage usually for a minimum of two years?

In terms of the deposit, one of my parents has come into money and is willing to gift me £10k for this purpose only.

Am I correct in thinking I would only possibly get an 85% mortgage given the defaults?

My salary is £47,257 and this will increase to at least £52,257 in September. However, this is due to a new job role and for the last few years I never earned above £30k. Hence I have about £8k in unsecured credit card debt, which I am now slowly paying off. However, my credit utilisation ratio is still  high. Being gifted the £10k to pay this off isn't an option, unfortunately. 

So the main questions are:

a) is it possible for me to get a mortgage?
b) if so, how soon can I re-mortgage once my final default drops off in May next year?
c) would it be better to just rent in the meantime and wait until May 2025 when I could get better rates?

Thanks so much and apologies for my ignorance or assumptions. 

rondixon1967

I should add: I am 39 (have opened a LISA!) and live in a Scottish city. 

Brie

what other debts might you have other than the CC?  phone contract?  car insurance paid monthly?  All these things will be taken into consideration.  Even when you get the card to zero if you still have the credit available that will be considered because you could go out and buy a big holiday or whatever with it.  

updates to your credit history often take about 3 months so factor that in for when the defaults drop off.  

Can you share a rental for the next year to give you more ££ to pay off the card etc?  Buying always takes more money than one expects (well did for me, every time) so you'll want to be prepared to have a spare wodge to pay solicitors, surveys, movers, bits and pieces for the new place etc.

rondixon1967

Brie said:

what other debts might you have other than the CC?  phone contract?  car insurance paid monthly?  All these things will be taken into consideration.  Even when you get the card to zero if you still have the credit available that will be considered because you could go out and buy a big holiday or whatever with it.  

updates to your credit history often take about 3 months so factor that in for when the defaults drop off.  

Can you share a rental for the next year to give you more ££ to pay off the card etc?  Buying always takes more money than one expects (well did for me, every time) so you'll want to be prepared to have a spare wodge to pay solicitors, surveys, movers, bits and pieces for the new place etc.

Thanks for replying.

I have a phone contract, but it expires in two months and I will go SIM only then as the phone is still good. No car. I think affordability is fine as I'm looking at 'only' a £100k property roughly. It's more whether the default and high credit utilisation make it worthwhile renting now and waiting until May 2025 to buy. 

ACG

a) yes
b) 2 years
c) dependent on you.

It might not necessarily be high rates, those defaults are quite historic. Depending on how many, who to, what for etc, it might be possible to get something on the high street. But the devil is in the detail. 2-3 defaults for £100 for a mobile phone bill is a bit different to 10 defaults for a grand each on credit cards. 

Speak to a broker, you will need one anyway for the adverse lenders. But I think you will have options with a 15% deposit. 

JustMe18

We had default 2 years ago and struggled to get anything until it's at least settled for 1 year. We are buying though shared ownership, so maybe limited in lenders. House prices here for the house we want are around £400k.  The worst rate I could now was 6.14%, which will be around £1300 a month for a new 4 bedroom detached house with garage and big garden. We earn around £6k a month, so for us even this rate was affordable. i didn't look much at the rates personally, I was looking more at the monthly payment, if I can afford it. After couple of years, will re-mortgage with a better rate. I'm not sure though if defaults are still live, would that be possible, as we had to wait exactly 1 year since it's settled, wouldn't even give exception when it was 1 month left. Hope it helps.

rondixon1967

If I'm looking at an 85% mortgage, I'm thinking £10k deposit means looking at at a property at about £65-70k? 

What is the worst interest rate I could possibly get?

ACG

rondixon1967 said:

If I'm looking at an 85% mortgage, I'm thinking £10k deposit means looking at at a property at about £65-70k? 

What is the worst interest rate I could possibly get?

I can aim at something around double digits if you really want? 

I think realistically you are looking at either high street (something under 5%) or around 6-6.5% as a worst case scenario.