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Mortgage query

My son got himself into a financial pickle several years back when his mother (my ex-wife) nearly got their house repossessed (my son was second joint name on my ex-wife's mortgage account). Thankfully, the house was not repossessed as they found a cash buyer at the last minute. For several years during and after the house was sold, my son ran up some big debts which resulted in two defaults being registered against him. The debts came from lots of house improvements that my ex-wife wanted doing at the time. All the debts were unsecured and were in my sons name.

Five years on, and my son is just about to pay the last of the instalments on the debts. He has since moved away from my ex-wife and is earning a lot more money. He would like to buy a place of his own and settle down. I'm going to give him 10K for the deposit, however, despite this, I'm wondering what sort of deal he can expect from the mortgage companies he is looking to approach. My initial thought is that with two defaults on his credit record, he will be refused a mortgage or offered one at ridiculous rates above the current base rate.

Anybody any experience in this sort of event? What is the best my son can hope for?

TIA

Reply to
CMS Tom
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The only way you (or he) can find out is to ask! What you say isn't entirely clear, you say that your son defaulted on debts but also that he has finished making payments. Has he now paid off everything, or are there still CCJs outstanding?

In general mortgages have more relaxed credit scoring than unsecured loans because they can always sell the house to get their money back (plus you can't really move away and disappear!). That will be particularly true if you have a reasonable deposit - whether 10k will be enough depends on what the purchase price is. Other questions are whether his job is secure and what other outgoings he has. Another option might be for you to act as guarantor for the mortgage, assuming you're willing to do it and that your credit rating is OK.

Reply to
Stephen Burke

Thanks for your comments. He didn't get any CCJs, just a notice of default under the Consumer Credit Act. After he got the defaults, he came to an arrangement with the bank to pay the debts back at a reduced rate. The debt should have been paid off in early 2002, however, because of the reduced amount, it is now going to be cleared in March 2004. The defaults are still sitting on his credit reference file.

Purchase price is 120K, and son is earning 38K. He's been renting for a while now, which is costing him a fortune, hence he's not been able to save a big deposit for himself. That's why I'm going to help him out. He says he wants to repay it, but I'm being fairly relaxed about it.

Mine should be OK - no mortgage and credit card bill paid every month.

Reply to
CMS Tom

I assume that the credit record will show that the debts have been satisfied once all the payments are made - it would be worth him getting his credit record from equifax and experian to check what they say (costs 2 each I think).

I would somewhat have to wonder why someone earning that much hasn't even been able to save a few thousand pounds. He must be renting somewhere a lot bigger than the place he's buying .... even at a 10% rental yield, which is a lot higher than most rents nowadays, a 120k property would only be 1k a month which isn't that much on a 38k salary. In general, for the same property, buying with a 100% repayment mortgage is likely to cost significantly more than renting. OTOH 110k should be easily affordable from a 38k salary.

Reply to
Stephen Burke

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