First Time Buyer - Bad Credit Rating...

knivesuk

Hello!

Im 24 and been working full time now for a year since University. I have been renting in the last year also and now thinking about getting a mortgage as it seems silly to give your money away when I could at least put it into my OWN house.

Back at University I was a bit silly with money. I dont have any CCJs against me, but I believe I have 2 defaults (everything settled). In the past (I estimate) about 2 years I have been good with my money though and don't remember missing payments.

I did do a credit check last August and saw that I had a very very bad credit rating. I currently earn £19k and hopefully will be change job soon to one earning £22-25. I also have no savings to speak of sadly.

Please could anyone give me advice to: 1. Is there even a possibility I could get a mortgage to get my own flat (£110000 ish) 2. Is it worth doing another credit rating check as I heard that credit checks reduces your rating.

Thanks for ANY information about this.

Terry

beecher

You need to start saving, and getting a deposit together. For a mortgage of that size you'd need a deposit of £11,000 to get a good rate, and even then you'd be looking at a mortgage of 4 times your salary, if you're earning £25,000 which isn't really very practical.

BTW, renting isn't giving your money away - it is paying for somewhere to live. I'd wait however long it takes to save up a good deposit and do your best to improve your credit rating by paying bills on time, making sure you're on the electoral roll, and waiting til the defaults disappear (6 years I believe?)

Have a look on here

http://www.moneymadeclear.fsa.gov.uk/campaigns/Mortgages.html

Bexter

Hi Terry

I can't answer all this though I'm sure many others can. However, I do know that checking your own credit report won't harm your rating - it's when lenders do a check that it counts (ideally you wnat no more than 3 checks in any 6 month period.)

From my own experience though the number of mortgages for people without perfect credit history are vanishing fast - and you need a minimum 10% deposit and possibly more. That mortgage amount would be very high on your income - I really think you would struggle to be honest. Better to try and save a deposit and then try, but on £25k you'd probably only get around a £90k mortgage as lenders are at present unwilling to offer large multiples of income.

Finally - there is an article about credit scores on this site I'm sure - it's a combination of factors so I think the ones the credit agencies give you are a guide - each lender has their own criteria re earnings, electoral roll, time at address, outstanding debt etc etc

Hope that's some help.

AndrewSmith

You are looking at 5.5x salary to obtain £110,000. It is excellent that you are 'hopefully' moving to a new job earning more however a lender will not accept that until it has happened and you are out of any probationary period, usually the first 3-6 months.

5.5x income, first time buyer, less than perfect credit history, 100% mortgage = not very likely I'm afraid.

Once you do get your new job squirrel away the extra money to go towards saving for a deposit. Once you have a 10% deposit it opens more doors to the mortgage options available to you.

Conrad

I agree, you need to aim to save 10% plus say £3000 for fees plus £2000 long term emmergency fund.

Caffca

I would pretty much second everything all the above posters have said. Don't rush yourself onto the property ladder - it's not an essential in your life really. Yes it's nice to have but not if you end up losing it anyway because you can't afford it in the end.

You are still young and who knows where your life / career will take you, that ideal job may turn up but it could be 200 miles away; you may meet your soul mate and want to buy together.

Enjoy your time in rented accomodation (no maintenance bills to worry about - an often huge cost with property that people often forget in the glow of home ownership dreams) and get into the habit of saving so you have enough for the deposit (at least 10%) plus money for the fees and moving costs not to mention kitting your new home out and finally a pot for the unexpected bills - boiler breakdown, pointing needs redoing, roof falls to bits - the list is endless!

Check out the savings articles on the main site, make sure you are using your ISA allowances and when you are in a good position to buy, with money saved and credit repaired you'll be able to get a relatively better deal than you could do now as more lenders will be willing to lend to you.

knivesuk

Thanks all for your great advice, I really appreciate it. I do think that saving is the best option for me right now and to continue renting.

My girlfriend mentioned part buy part rent schemes, would this be something I could look into or should I just continue with renting?

Caffca

Part Buy Part Rent or Shared Ownership - all the disdvantages of owning a house and few of the benefits!!

There are a lot of threads on the house buying forum about SO - browse through them. Personally I wouldn't recommend you go this route just yet. When you are ready to buy it might be worth considering but only if you research it fully - for now enjoy being young and carefree - it won't happen again (bitter old hag that I am )

The_Vix

Hiya, I'm also 24 and am looking to buy the flat I've been renting with my partner for the past 2 years.
My credit rating is appalling. I mean terrible! I have a manged loan with HSBC, as well as other credit cards etc but I've been keeping up with these payments for some months now so i'm slowly on my way to digging myself out. Small steps!! My partner's credit rating is also slightly dented, but that was some time ago.
We have managed to get 15,000 together for a deposit by scrimping for the past 2 years, which we're pretty proud of, and we're looking to buy the flat for about 106,000. His parents have offered us some help too, so the deposit could end up being as much as 20,000.
Will my credit rating screw this up for us, even with the deposit? And if not, does anyone know how much i'd be looking at for the monthly payments on the mortgage? My partner is desperate to get on the ladder, but I don't want to jeopardise the monthly bills that i've been good with by taking on a mortgage with a higher monthly repayment. We're currently paying £750 rent, would it be much more than that if we could get a mortgage? And should we even be thinking about doing any of this right now, with the market as fragile as it is?
Any advice would be greatly appreciated!