mortgages with bad credit

Happydayz_2

Hi everyone,

Im looking for some advise, ill briefly explain our situation.

My partner is self employed and came out of work 2 years ago which meant we defaulted and got into arrears with none priority bills. All utility bills and mortgages payments were paid on time etc etc but as a result we now owe £20k roughly and have made the decision to sell our house to pay what we owe. The house went on the market this week and if/when it is sold we will have enough money to pay what we owe and will leave us with about £5k.

Ive looked at many options e.g. renting a house but today had an idea about buying a house again!

i earn £15k a year with a part time job which i earn £3k a year
my partner is self employed and earns roughly the same as me, he is looking for a new job and has recently been for a interview and passed the first stage... if he gets this job then he will earn £20k p.a.

We would be looking at a mortgage of about £125k and may possibly look at a new build property, i believe some companies pay 5% deposit and we would have £5k.

I dont know where to start with this process or even if we could do what im planning to do, would we be able to get a mortgage with what im proposing or would we just be laughed at? it just seems silly to pay rent when we could stay on the housing ladder and pay the same as we would in rent. We also thought about getting an interest only mortgage for a few years and then change to a repayment mortgage.

Can anyone advise me? Thanks

homer_j_3

I think you need to order your credit file and see exactly what is on there. This will determine how much a deposit will be required.

Where new builds are concerned, you have to realise that the 5% deposit is just a 5% inflation on price and that its a way of helping shift their properties. You will have set up costs and buying costs which will take some or all of the 5k depending on purchase price.

Looking at mortgage. You are thinking int only? You would be strongly advised against this in a decreasing market. If you cannot afford repayment then I would consider renting imho

toomanyshoes

I dont know the ins and outs of this Barrets offer but I heard it advertised on the radio the other day.

They claim to give you market value for your current house to help you move smoothly into one of their new builds.

May not help the mortgage side of things of course - I think you have to use one of their recommended brokers, or any price difference but maybe worth a look?

http://www.barratthomes.co.uk/move

minimike2

Dont get your hopes up. Most lenders wont go more than 85% on a new nuild property now. Some are as low as 65%

jeanette251978

Thanks for the replies everyone.

Im trying not to get our hopes up but its just a thought as we would really like to stay on the housing ladder! We have made mistakes and obviously now is the time where we might have to rent. I just figured that we could spend £700 on a rent a month then if we could get a mortgage and pay the same then why not. We would be in a strong financial position once we have sold and pay what we owe, obviously my partner getting a permenant job would really improve our financies as currently working in the trade is his means we dont know what hes going to get paid, winter is terrible and summer is great.

Ive have got a copy of our credit report and it is shocking so i know that there is probably only a 5% chance of getting a new mortgage. Having just a few defaults really makes a difference to your credit score.

I thought that getting an interest only mortgage to start with would be better, due to the current climate, our situation. i thought that getting a interest only for a couple of years, then work at improving our credit rating and wait for the market to stablise THEN get a full repayment mortgage probably on a better rate.

by the looks of things we probably wont get what we want so probably no point thinking more about this.

jeanette251978

jeanette251978 wrote: »

Thanks for the replies everyone.

Im trying not to get our hopes up but its just a thought as we would really like to stay on the housing ladder! We have made mistakes and obviously now is the time where we might have to rent. I just figured that we could spend £700 on a rent a month then if we could get a mortgage and pay the same then why not. We would be in a strong financial position once we have sold and pay what we owe, obviously my partner getting a permenant job would really improve our financies as currently working in the trade is his means we dont know what hes going to get paid, winter is terrible and summer is great.

Ive have got a copy of our credit report and it is shocking so i know that there is probably only a 5% chance of getting a new mortgage. Having just a few defaults really makes a difference to your credit score.

I thought that getting an interest only mortgage to start with would be better, due to the current climate, our situation. i thought that getting a interest only for a couple of years, then work at improving our credit rating and wait for the market to stablise THEN get a full repayment mortgage probably on a better rate.

by the looks of things we probably wont get what we want so probably no point thinking more about this.

Dont wish to confuse, that is another mse account of mine lol

neverdespairgirl

jeanette251978 wrote: »

Thanks for the replies everyone.

Im trying not to get our hopes up but its just a thought as we would really like to stay on the housing ladder!

My personal view is that this would be a big mistake. It's more of a property snake than a ladder at the moment - prices are dropping in most of the UK. So if you are only on an interest mortgage, you are renting from the bank and sliding into negative equity at the same time.

jeanette251978

neverdespairgirl wrote: »

My personal view is that this would be a big mistake. It's more of a property snake than a ladder at the moment - prices are dropping in most of the UK. So if you are only on an interest mortgage, you are renting from the bank and sliding into negative equity at the same time.

We realise that after having lengthy discussions today, i think we are going to rent something cheap for a year or 2, save like crazy people and then see what the market is like then.