My current situation is:
Finished a long DMP in November. No defaults on my file but I do have a history of payday loans, all paid off in full. The last one in November 2019 looking at my Credit Report (I have recent Transunion and Equifax reports)
I currently have 4 smallish limits on credit cards. I use them for shopping/petrol etc and pay them all off in full on payday so that no interest is incurred and to try and boost my credit worthiness.
My wife (through my old debt) has two defaults on her credit report. One drops off this month (6 years old). The other is not 6 years old until December. The total outstanding balance is £2.9k and we have been offered a part settlement of £2k.
We have £8k saved up so far and all things being good should be able to save around £2.5k a month now all the debts have been paid off. Our Annual income in total before any bonuses is £85k.
We are looking at the Help to Buy scheme as neither of us have ever owned a property. We live in and would only be interested in living in Kent. There are a number of new builds going up and the prices I see for what we would like (3 bedroomed house, 4 if viable) are between £350k and £420k. So a deposit of £17.5k and £20k needed. Then the 20% Equity Loan and then a 75% Mortgage.
With the £8k currently plus £10k over the next 4 paydays we will almost have the deposit by the end of April. I’m aware the Stamp duty is due to end, unless it gets extended, so we have missed that boat, but doing some research – I could be wrong – as first time buyers we may only have to pay the amount above £300k at a certain %
as mentioned I’ve never bought a property before so not sure at all how this all works. I did speak to a couple of property developers this week (Persimmon and Bellway) who told me to contact their mortgage/sales phone lines, but thought I would try you first.
I guess I’ve got two main questions at this stage:
Without you having all the details, just the summary above….and bearing in mind the default….do you think a mortgage would be viable this year?
Should I pay off the £2.9k debt, the £2k offer or leave it all until next year.
Hi Luke, thank you for getting in contact with such a comprehensive summary.
In short I do believe this is possible so long as you're careful to stay within the new help to buy purchase price limits however I'm sure the developer will ensure that is the case.
Credit wise I don't believe it would be necessary to clear those debts so it would more be a decision based on affordability.
Thanks for the qiock response David.
What would be my first point of call and when please? Do I speak to the developer(s) first? Or you guys and when would I do this?
As I understand it based on a £400k new build in Kent I would need a £20,000 deposit, apply for an Equity Loan of 20% via the Government Help to Buy scheme and obtain a 75% Mortgage.
If I don't pay off the £2k default amount I estimate I could have the deposit by the end of April, end of May the latest.
David has signed off for the weekend I am afraid and we tend to have longer response time. If you wanted to call into the office we are open until 10pm tonight and 9am to 8pm over the weekend days.
Your numbers are accurate, but please ensure you double check the lending limits in your specific area for the Help To Buy.
I would always recommend you obtain mortgage confirmation before setting your heart (and reservation fee) on a property..
Hope this helps..
Thanks very much Hayley. I shall give you a call over the weekend.