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Poor credit score

I am thinking to buy a house , my situation is that in 2021 I went bankrupt because my business failed through Covid I was discharged a year later . My credit score has improved , but I noticed 5 errors on Trans union , so I reported them and in a week 2 of them are settled , so I’m waiting for the other 3. To help my score I paid off both my credit cards but left about £100 on one to continue getting marks for payments . (The other one I kept open but it’s at £0) I have £80,000 for a deposit that my Dad is giving to me as a gift . I have no more debt and been working for 2 years but only earn £38k. Does anyone know if I would be able to get a mortgage ? I know my bankruptcy will drop off in 2027 , but I don’t want to wait that long as I’m 43 . If I could get a mortgage what kind of interest rate do they give to someone with derogatory marks on their file ? 

Comments

  • ACG
    ACG Posts: 24,216 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    If you wait until 3 years discharged you will notice a MASSIVE difference in your options. 
    When in 2022 were you discharged? 

    Before the 3 years discharged, your probably looking at rates of maybe 7-8% with a 25% deposit. Over 3 years and you could be looking at as little as 5% deposit and rates of 5-6% (possibly less but unlikely from what you have said). 

    Definitely one for an experienced broker to help with. 
    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.
  • Mark_d
    Mark_d Posts: 1,934 Forumite
    1,000 Posts First Anniversary Name Dropper
    You don't have the best credit history and it sounds like your income hasn't been stable for too long.  You may be able to get a mortgage now but you won't get a good interest rate and you won't be able to borrow a substantial amount.

    Buying a place now would be making a bad investment as you would be severely restricted financially.

    My advice would be to wait two years, whilst aggressively building your savings.  Keeping a debt on your credit card is not a good thing - it costs you money.  If you, like me, use a credit card for everyday spending and pay in full by direct debit each month, you will be demonstrating that you are sensible with money and reliable.
  • larn555
    larn555 Posts: 4 Newbie
    Sixth Anniversary First Post Combo Breaker
    I appreciate your responses in this matter , I understand my credibility will be much better in a few years , but I just feel unhappy in social housing for a variety of reasons . I was discharged July 2022, I thought the bankruptcy would be deleted from the date it began ?

    Would it be possible to get a new mortgage with a better rate once my credit improves later on ?
  • larn555
    larn555 Posts: 4 Newbie
    Sixth Anniversary First Post Combo Breaker
    (I mean 6 years after the bankruptcy date )
  • ACG
    ACG Posts: 24,216 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Mortgage lenders tend to work from the discharge date - not all, but most. 
    July 2022 to July 2025 would be 3 years discharged. If you apply before whatever date in July your options are limited to a handful of lenders. Rates are higher and the deposit you need will be significant. 

    Just to give you a rough idea, I would imagine rates will be around 7% mark with a 25% deposit if you were to apply now. But holding off until July you could potentially get 5.99% with a 5% deposit, possibly lower with a bigger deposit. 

    There are options now, but a broker will be able to go into more detail for your specific circumstances. You might want to move earlier, and thats fine. But being northern and a bit tight, I would rather hold off for 5 months. 

    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.
  • larn555
    larn555 Posts: 4 Newbie
    Sixth Anniversary First Post Combo Breaker
    Ok thanks for that mate , I will ask my mortgage broker what he thinks , maybe he will know about which bank would be better to use . I’ve got £80k for a deposit so hopeful that will improve things 
  • ACG
    ACG Posts: 24,216 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    No need to aggressively build your savings then...

    A good deposit and/or time will usually overcome most adverse issues. You should be fine, but as mentioned July will make a big difference. 
    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.
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