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first time buyer getting a mortgage whilst in a debt management plan

Hi Last January I consolidated my debts into a management plan, due to this a couple of the creditors have marked red on credit referencing agencies, the plan has 3years to run to pay all off. My girlfriend and I wish to look at buying a house through one of the government backed first time buyer schemes, due to the debt management plan on my side would any mortgage providers touch us? If there are mortgage providers that specialise in our scenario who are they, also would there be a company that would allow us to tie my debt into the mortgage? Total debt I have is 9k. Any help and advice appreciated. Many thanks


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You would appear to have defaulted in the past - hence the red items. Those will stay on your record for 6 years from the date they relate to. If you are in Debt Management Plan, presumably you have no savings to put down as a deposit for a house. Does your girlfriend have any? Is her credit rating OK? Could she buy it in her name, maybe on a lower portion? You should be able to help with the costs of running it. If so, maybe you could start with that and then when your record is clear you could join in and take on a higher proportion of the house? You might even be able to take on all of it by then. Any other solution would cost you an arm and a leg in higher interest charges. Mike

Thank you for your reply, you seem knowledgeable if I could pick your brain some more I would be very appreciative... Fortunately my mum and dad are in a position to provide us with a deposit, though we would need to take a mortgage ourselves. My salary is greater than my girlfriend, her basic is very low as she works for the nhs. Due to the defaults will that in essence mean until full debt is repaid or 6years passes I will be unlikely to get a mortgage, with my name on? We would be looking for a mortgage outright of circa 150000, or a part share mortgage of circa half that, unfortunately we live in the expensive south east! I am keen to find the find the fastest way to get our own home, as paying someone rent frustrates me, as is ultimately throwing money away. would we be in a better position to ask mum and dad to use the money they have fir us for a deposit to wipe my debt then save a deposit ourselves? Any advice greatly appreciated?

Hi there Jay 2484 I totally agree with the advice that Mike has given you on here...a couple of things I would add, if you are going to use the money your mum and dad are prepared to give you for a depoist make sure you tell the lender. Most lenders are happy with this but it always best to make them aware at the offset to prevent any problems down the line. I think that is definitely an option for you to look at, wiping the debt clear, however even if you do that the defaults will still show on your file, like Mike has said for six years, so it could still factor into the lenders decision. Anway I will leave it there, good luck I hope it all works out for you both. Regards Rachel@abcfinancial

That is very kind of your Mum & Dad. If they did let you repay the DMP, you would then not be able to start a mortgage for some time, while you were saving up for the deposit. You would have to pay rent in the meantime. If you did repay it early, your defaults would remain on your credit record. Assuming that the last one was just before the DMP started, it will be another 5 years before your record is clear. There are various starter schemes, some especially for Key Workers, such as NHS employees. I would suggest that you consider starting with whatever portion your girlfriend can get a mortgage for. Then in 3 years you may be able to take on more because you should be able to show that you could manage the amount that you have been contributing to the DMP. Failing that you would be able to do it in 5 years, provided that you do not default again. Rachel was right to comment about informing the mortgage provider. You will be asked by your solicitor for the source of the deposit, so it is better to say in advance or they might think that you were trying to conceal it. Good luck Mike

For the benefit of any unmarried couple thinking of buying a home together, I would strongly suggest that they decide in advance what would happen in the event of a split. You might intend to stay together for the rest of your lives, but the records show that a high proportion of unmarried couples do split up. It should be included in a Deed of Trust as part of the purchase. You should also buy as ‘Tenants In Common’ rather than as ‘Joint Tenants’. If you don’t and do split up, it is very difficult to sort out if there is any acrimony, which is usually the case on a split. Mike