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How long for credit history to bounce back?
investme
Posts: 106 Forumite
Hi all,
Bit of a long winded question covering credit history, mortgages and credit cards so hope this is the right place...
Anyway. I currently own a house on a mortgage. I have approx £150k on the mortgage, and the house is worth approx £210-215k.
I also have about £22k in debts - all on credit cards (interest free, currently). Like most people, i had every intention to clear these debts but they've just sort of ticked along, though i am slowly clearing them and i've no missed payments.
My credit reports not great, it's basically 5 maxed out cards. I don't have any other problems however (missed payments, defaults etc.)
My plan is, to sell a car worth approx £10k and use this to clear about half of my CC debt. When my credit history improves as a result, i want to sell my house and buy another (with a new mortgage) to renovate as a project plus clear my remaining debt as i'll be able to free up around £65k in equity.
The intention is to be debt free (excluding mortgage) and make a small profit on the renovated house at the end.
I'm not here to ask for advice on the cost of renovation etc. - it's more a question of how long will it take after clearing approx 50% of my debts for my credit history to appear attractive enough for lenders to consider lending to me again?
Bit of a long winded question covering credit history, mortgages and credit cards so hope this is the right place...
Anyway. I currently own a house on a mortgage. I have approx £150k on the mortgage, and the house is worth approx £210-215k.
I also have about £22k in debts - all on credit cards (interest free, currently). Like most people, i had every intention to clear these debts but they've just sort of ticked along, though i am slowly clearing them and i've no missed payments.
My credit reports not great, it's basically 5 maxed out cards. I don't have any other problems however (missed payments, defaults etc.)
My plan is, to sell a car worth approx £10k and use this to clear about half of my CC debt. When my credit history improves as a result, i want to sell my house and buy another (with a new mortgage) to renovate as a project plus clear my remaining debt as i'll be able to free up around £65k in equity.
The intention is to be debt free (excluding mortgage) and make a small profit on the renovated house at the end.
I'm not here to ask for advice on the cost of renovation etc. - it's more a question of how long will it take after clearing approx 50% of my debts for my credit history to appear attractive enough for lenders to consider lending to me again?
0
Comments
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Not enough info to say. It's not just about your debt, it's also about your income and credit history.
If you have a long history of high utilisation and minimum payments, that could equally deter lenders.0 -
Happy to give extra info, if the below isn't enough, let me know
Income is £36k~ +bonus, full time employment for nearly 4 years in a stable company. Actual history is generally good, with the only exception that most payments have only just been above minimum, although there is plenty of evidence of me paying chunks off here and there or raising payments when finances allowed
If i was to go ahead, my thought would be to clear the cards whose IFP is expiring soonest and close those. Then instead of leaving 2/3 cards fully maxed out, pay a small chunk off each card so none were at full utilisation0 -
What future lending are you looking at getting?0
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Deleted_User wrote: »What future lending are you looking at getting?
Just another mortgage, would depend on the value of whatever property i bought on selling my current home. Not looking to take any future loans, cards etc.
To take an example... If I sold my house for £210k and paid off my mortgage at £150k, i'd have £60k 'in the bank'. Clear remaining debts, lets call it £15k for arguments sake, that leaves £45k.
If i put down a £30k deposit on a £160k house (leaving £15k for renovations) that would mean i'd need a £130k mortgage at 15% LTV (well, 18.75)0 -
As long as your history is solid and free of missed payments and defaults, the only issue you'll face is affordability, rather than acceptance. Any outstanding debts will lower the amount that you'll be lent on a mortgage, but different lenders take different approaches.
It would be well worth using a broker to see who best to place an application with - or at least spend some time on the mortgage boards here - as all lenders are not created equally.0
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