Posted on 3 June 2010 by Mike Ling
My wife and I are first time buyers earning £58k and £19k and looking at a new build house at £235k. We have, at a push, £48k to use as a deposit.
Now the bad bit. I have 2 defaults on my credit report from Feb 2007 and both defaulted accounts were settled in full in Apr 2009. Is there any possibility of getting a mortgage on this property?
As an alternative there is a property on the same development at £199k. Would this be more of a possibility to achieve, albeit I would be less inclined to gather the same size deposit?
The defaults are going to be a problem, but I don't think this will be insurmountable. The mortgage you are looking for could be serviced by your wife's income alone and by putting her as the first named applicant we can reduce the impact of your poor credit record.
The other main obstacle you will need to overcome is the current reluctance of Lenders to lend on new build properties. This is due to the premium price that people pay for a new build property and much like when you buy a new car which loses it's value as soon as you drive off the forecourt, the same happens with new properties.
Fortunately, you have access to a large deposit which brings you into the range Lenders will consider on a new build house (80% LTV). However, if you were to be buying a new build flat at the same price you would have to find at least another 5% of the purchase price.
Looking at the alternative property, if you can put in the same size deposit on this and reduce the loan to value (LTV) to 75% this will give the Lenders more leeway on their credit scores to allow for your defaults.
I recommend that you speak to an independent Mortgage Broker, who will know which Lenders to approach for your first preference before you make any decisions.
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