Posted on 31 May 2010 by L Joyce
I have recently inherited a house with a lot of equity in it. Although the house has been left to myself, I have to pay out around £40,000 to another family member. I want to buy the family member out of the house and do not want to sell, but unfortunately I have bad credit. What would be the best option?
Depending on the level of bad credit you have, it may still be possible to raise a mortgage to buy out your relative. Any mortgage application will also take into account whether or not you intend to live in the property and your other personal circumstances.
Alternatively you can wait until your bad credit has been removed from your credit file, which can take up to 6 years, before applying for a loan or mortgage. The exact time will depend on how recently the bad credit records appear on your file and unless you know, I recommend that you apply to one of the major Credit Record companies for a copy of your file. A statutory copy can be obtained for a small fee or you can get one online by signing up for a 30 day trial. These are normally free so long as you remember to cancel before the 30 days expire, otherwise there will be a monthly fee.
Have you spoken to your Bank Manager about whether a personal loan is an option? Depending on your relationship with the bank, they may well consider an application where others who do not know you wouldn't.
I recommend that once you have a copy of your Credit Report you speak to an independent mortgage broker to see if a mortgage is a viable option. If it turns out not to be then you will need to reach an agreement with your relative about how to proceed and I recommend that you seek independent legal advice to see what your options are.
Answers provided in response to Ask the experts are based on the information provided and do not constitute advice under the Financial Services & Markets Act. They reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.
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