Mortgage application

[mortgageadvice]

My partner and I have been renting privately for 6 years and didn't think we would be able to save enough for a deposit for a house for many years.
We have just been told a family member is dying and one of their wishes is to see us settled in our own home before they die. It's such a heartbreakingly generous offer, and they are in a position to transfer us what would be approx 50% of a house price in our area. Their estate won't be liable for inheritance tax so no-one is trying to avoid their dues.

That leaves us with trying to get a mortgage of approx £140k between my partner and I. We earn approx £35k per year between us but we also both have pretty poor credit ratings. I have buried my head in the sand abit about this in the past but I guess we will now have to tackle everything and come clean to everyone about our debts ( have £4K outstanding on one loan, £4K on a CC and I also have another outstanding debt of £4K I am about to start clearing). My OH has just finished paying off a loan but his account frequently bounces direct debits.

Basically, since having kids we have been living month to month and got in to a bit of a mess.

My question is, do you think because we have such a high deposit, we will still be accepted for a mortgage despite our credit history?

If I was in your position I'd find a good mortgage broker and ask them.

Thanks, Purple
That was my plan for tomorrow but just thinking things over today and thought I'd see if anyone could shed any info

Have you tried any of the online mortgage calculators? I found the HSBC one easiest to use. I don't think it will tell you about bad credit ratings but you can put in debt etc and your wages and it will say how much you can probably borrow.

https://www.online-mortgages.hsbc.co.uk/1/2/how-much-can-i-borrow?ESSTATEE_RESET=true

I wasn't quite in this position but was also getting a mortgage on my own so they were stricter about any debt - I ended up using some of what would have been my deposit to pay off anything outstanding (loan and credit card), that way then at least my future monthly outgoings were all linked to the property (utilities / mortgage) other than my phone.

It would be worth asking a broker if this would help your application

Definitely talk to a broker - London & Country are often recommended on here and they're really good. Some mortgage lenders have products specifically for people with poor credit which you could be eligible for - it would mean a higher interest rate for the first couple of years but once you'd come to the end of your initial term you would be able to switch to a lower rate presuming your credit was OK by then.

Thanks everyone

I have London&Country's card for us to call next week so it's good to get another recommendation for them

I had considered using part of the funds to pay off some of the debts but that feels selfish in some way.

That totally sounds sensible! If you feel bad about it you can always set yourself a target to save the money back so you feel it didn't disappear.

I would agree with seeing a broker.. not L&C but definitely a broker would help you. It might be worth using some capital to repay debt and have a 60% mge for example.
If you are good payers your credit rating may not be as poor as you think it is, as long as you don't have late payments etc. You can check your credit report in advance of meeting with a broker.

Just a thought but will you incur any inheritance tax? I don't know a huge amount about it but I think if they're over the threshold for IHT and they gift you money within 7 yrs of their death then you incur duties. Just something to bear in mind.