Rent, Buy, Debt, Inheritance..

[theenchantedhood]

Hello. DH and I bought tiny 1 1/2 bedroom house close to station, local town, fab views - perfect for that moment in time. We had been renting and desperate to get on ladder as FTBs.

Bought in 2007 worst time with NRAM 100% - stupid. Now have 2 DC Boy/Girl and I can drive. However, two lots of mat leave, driving lessons etc I have found myself with 2 CCs and a loan all amounting to 15k. DH is in DMP but FT work. My FT wage has gone up considerably (33k) and I would have to take out a new mortgage on my own.

We are desperate to sell. Tiny bedroom with 2 toddler beds in! Current house in neg purchased 85k now valued at 65k (poss sell 67-9). So we have paid off neg. Outstanding unsecured loan is 9k.

I have inheritance of 30k from family when we are in position but with the DC we are running out of space and were hoping to get rid of house as so much needs doing - v mouldy in places so kids health also.

I have been looking at all the figures - what to pay off first and how much to save from inheritance - for the deposit. To rent? Weighing up what Credit to pay off and unsecured loan leaving just 4500k (deposit). Ideally house for 90-120k - realistic or choke on coffee?

Please could any one advise or similar stories with a good ending?! Thanks :)

Without debts and with your salary you would be able to borrow for a property at the value you're interested in.

The figures you've given don't seem clear though - 30k inheritance, 15k between cards and loan, should leave you with 15k deposit surely, not 4500?

Sorry intend to pay off unsecured loan and CC figures may be out but know 4500 is all that's left. Thanks for your reply!!

Your credit rating would need to be excellent to try and find a mortgage with only 5% deposit! I'd start saving as much as possible to boost that figure up to 10% realistically.

That's really helpful thanks!

"I would have to take out a new mortgage on my own"

A mortgage based on your salary would still involve your DH in some way as the mortgage supplier would need to know who was planning on living there (down to names and ages). If you are married (presumably, yes, as you wrote "DH" rather than "OH") they are unlikely to ignore your DH's credit history (but other Mumsnetters please jump in here to disprove this). If you were unmarried then a legal contract can be drawn up where he would agree that he had no 'interest' in the property (financial stake) - again tricky to implement if you have a joint mortgage already. If you are married I can't see that working as if you split up or one of you died then the other partner would be entitled to a share anyway (and doubtful your DH would be thrilled either!). Remember mortgage providers are very risk adverse so try not to over complicate matters.

It seems to me that you need to simply your finances - pay down your debt - the cards and the loan - whichever is the most expensive. Depending on when you took your loan out, these can be quite affordable and you could carry on paying that down to preserve some cash reserve. What are the APRs on the loans and the credit cards?

You need to tackle the maintenance issues of the property ASAP. I am not sure how bad the problems you describe are, but in order to sell your flat you need to get on top of this. You may need a specialist but bleach and heavy duty paint can help.

Is YOUR credit history squeaky clean? Have you ever paid your CCs late etc? You can get a copy from one of the credit checking agencies. When you have your credit score you can figure out how likely you are to be offered the best mortgage deal and you can then go to a broker with your head held high.

Lots of these issues can be researched on www.moneysavingexpert.com which I would recommend as essential reading (there are lots of active forums on financial topics),

Good luck with your plans.

Babelange if the mortgage is just going in her name, they can't credit score her DH as he's not applying for credit. They simply need to know the number of other people in the property.

My answer was a bit convoluted but I just wanted the OP to take care and not assume that applying for a mortgage with one salary/one name would be straightforward, particularly if the sole purpose of this is to lose the OH's debt history. I am not a broker, just an ordinary person and the questions I have been asked when applying for a mortgage recently relate to marital status, name, age, relationship of other people who live with you/are dependent. There are lots of questions relating to affordability and costs of living and if these are shared (or form part of his DMP) this could be tricky to explain.

There's another thread on this board on the same topic with a number of opinions expressed.

Pay off unsecured debt like CCs first, do maintenance to the house and see what you have left. What is the cause of the damp? Is it just condensation damp? If it is then it is difficult to get rid of completely but easy to repair/temporarily cover up for a sale, and then you can take steps to reduce what comes back.

I would pay off debts, sort damp and then with extra money you have from not paying debts save up for more of a deposit. You need to be careful as rates can only really go up from now on so you either need to get a good long term fix or make sure you can afford 1 or 2% increase.

Oh and you would have to see a broker/bank to check how much you can borrow. Online calculators only give you a rough idea. We were told we could borrow significantly less after having DS - hence we didn't tell them about DS2. (I wasn't very pregnant so within what I thought was a period of plausible deniability!)

Plus don't forget to budget for fees - solicitors, movers, etc both for sale and if you want to buy again.

babelange
If the person with the bad credit is not on the loan, the lender cannot account for them
same as when a hubby buys a house with an SAHM, they ignore her