To sell our home and rent while credit score improves

[happyclapper]

We have sold our house at full asking price despite some issues with the property but are unable to buy for another 6months to a year when a default notice expires on our credit rating.
I don't think we would ever get such a straight forward sale again if we let this buyer go.
Am I crazy to risk getting off the property ladder?

I've lived in 6 houses in 5 years, been credit checked for all of them, never had in issue. That is despite not being able to get a phone contract or overdraft due to my credit history.

We have been through a specialist mortgage broker who advised us to wait 6 months before applying for a mortgage as we would currently be declined until our default was 2yrs old at least but thank you for your best wishes, seesensepeople.

op, you do realise there's a massive difference between a default expiring and it being over 2 years old don't you?

If you are pinning your hopes on getting a mortgage with a 2 year old default when you've said yourself you have no chance now (when it's presumably 1 year old)

It will show for 6 years.

Argh- lost half that post.

Should have said risking your house on the chance of getting a mortgage with a 2 year old default as opposed to a 1 year old one is an enormous gamble.

The broker has said that there re lenders willing to lend when a default is 2yrs old and more again when it is 3 yrs old. I am aware it stays on y credit history for years. I was just being lazy earlier in my explanations.

In that case then, I'd wait it out until you're past the 3 years. As said above, defaults stay on your credit file for 6 years, so they could affect things that long. If you stay put until it's past 3 years and you get accepted for a new mortgage, then great. If not, you still have your house and you haven't lost anything.

Just to check as well, have you obtained copies of your credit files from all three credit reference agencies to make sure the dates all match up?

As someone else said, it does seem like you'd made your decision before you posted so it's all a bit pointless but bear in mind nearly everyone on this thread thought it was potentially unwise and that was based on you having an expired default.

Doing it with a default that will only be 2 years old is an enormous gamble. If you're unhappy where you are then it might be a risk worth taking but be prepared to end up renting for up to 5 years when the default actually does expire, not just for 6 to 12 months.

I'd try and get more advice on which lenders would consider you with a 2 year default (not worth trying on any internet forum as brokers are not allowed to recommend specifics) and see if you'd meet all their other criteria.

Things to consider are size of deposit, loan to value ratio, number of dependants and cost of childcare etc, some lenders have maximum lending limits on new builds too.

All lenders have different criteria and if you are restricting yourself massively with the default you need to know you'll be ok on everything else.

I'd presumed that it would drop off your credit file completely in 6 months. I really don't think that 2 years will make a difference... There's a section in the Times about how difficult it is to get a mortgage with any type of negative or unknown history at the moment. I think it'd cancel you straight out.

So I'd do the sums and see how much of your deposit will be affected if you end up renting until it properly drops off, and if you have to move each year so you have removal fees and agents fees factored in. That way you'll have something just better than the worst case to make your decision with.

We sold and rented before buying this property but that was at the start of 2007 with everyone predicting a crash (which then happened - at least outside of London). As a result we did very well out of it, selling at the top and buying at the bottom.

In your situation however I'd sit tight unless your current property is making you absolutely miserable. If you don't have a large chuck of equity then it could be eroded very quicky.

quickly

We are in a similar position op.

We have a mortgage, but the house we are in atm is just too small for us (was fine for me and dh when we were a couple but not so much with 2 dc). We have a VERY large CCJ (£18k!) on our credit file which will drop off in about a year. Although we are in an excellent position financially, have secure jobs etc, it makes re-mortgaging to move to a bigger house impossible. We just won't get accepted at the moment.

We considered selling and then renting but decided against it - I really don't want to get off the property ladder and risk a housing boom that would see prices soar over the next year or two, which would make it difficult for us to buy again.

So we've transferred our mortgage to a BTL and rented it out (tenants moving in Dec). The rent will just cover the mortgage and LL insurance, and we have about £2k set aside in savings, as back up money for if the house needs any repairs etc.

Regarding the Estate Agents 'not letting' to you because of poor credit. It's not always the case, and the credit checks that Estate Agents undertake are NOT as black-and-white (yes/no) as when you apply for a mortgage. Ultimately the LL will have the final say and can decide to take you as tenants whatever the EA says.

We have arranged a rental of a bigger house for us. We found one we liked, approached the EA and told them upfront that we would fail the credit check, but would like our 'case' to be presented to the LL anyway. We explained the circumstances of our £18k CCJ (which are very unusual and not a case of 'bad' or unpaid debt...there is a 'reasonable' explanation to it iyswim) and asked that they speak to the LL. We could easily prove affordability and 5 years worth of unblemished history with making our mortgage payments on time.

The LL considered it, met us and asked a few more questions, and then agreed to let to us. We still had to pay the credit check fee (which as predicted came back failed) but did not have to have a guarantor or pay rent in advance, despite failing the credit checking.

Disclaimer: I think our situation is more likely to be an option if the house has been empty a while and the LL is getting desperate. Our rental had been empty for 4 months and before we approached I think the LL was resigning themselves to thinking it would probably remain un-let until Christmas was over, so was much more open to considering us.

Is the default 2 years old or closer to 6? Do you need to move? You haven't said why you put your house on the market if you aren't buying another one now.

Will you be able to pay rent upfront when you have sold your house? That should help greatly.

Agree with the other posters that say you will be in a good position buying while being in rented and chain free.

Do all landlords automatically reject prospective tenants with poor credit records? That seems very unfair. We had a lot of debt problems 10 years ago, which went on for a few years , but we paid our mortgage on time and in full without fail throughout. If we had been renting we would have done the same.