UK Credit rating improvement - two year plan - pre mortgage

[showmethemundy]

Hi All

 

New to forums, so please move if I have posted in the wrong place.

 

Thank you in advance for any comments.

 

Introduction

 

My wife (38) and I (44) are currently in a joint ownership mortgaged property, in a debt management plan, with defaults on bank loans and credit cards. We both have good earning potential and hope to remortgage in approximately 2 years (after April 2019/20) to achieve full ownership.

 

Current financial position

 

Our current property is in my wife's name. It's a joint ownership (50%) 3 bed semi. Our 50% is valued at around £85k. We have £18k o/s on the mortgage and a further £6k charge on the property from Cabot re: an old CCJ that is no longer on the wife's credit history. Approximately £60k equity.

 

Wife is in long term permanent employment earning £32k per annum.

 

Husband is Director of own Ltd Company. Currently in year 1 with expected earnings of around £28k (£8k salary + £20 dividends). First year end is April 2018.

 

Current debt position

 

We currently have around £20k of debt under a debt management plan. Two years ago my wife was ill and I was made redundant. Rather than bury our heads in the sand, we tried to deal with our creditors, asking for payment holidays or help with interest payments. We tried to consolidate but none were helpful. Despite being pro-active, they all served us with defaults.

 

Below are the debts showing as default on our credit check. The bottom two credit cards show as "up to date" but when you drill down it shows the payment with "DM" next to it for debt management.

 

 

Type of debt Amount £ Default date 6 year date

Bank o/d 742 28/08/2012 28/08/2018

Bank o/d 998 29/08/2012 29/08/2018

Bank Loan ,627 31/12/2012 31/12/2018

Credit Card 2,617 29/01/2013 29/01/2019

Credit Card 1,716 27/03/2013 27/03/2019

Credit Card 424 06/12/2013 06/12/2019

Credit Card 1,494 28/12/2016 28/12/2022

Credit Card 1,948 28/12/2016 28/12/2022

Bank o/d 325 22/02/2017 22/02/2023

Credit Card 1,819 up to date - DM

Credit Card 4,013 up to date - DM

 

20,723

 

The default date is from our credit reports and I have added on 6 years as I believe/hope the debts will drop off our credit reports after this date (?).

 

Plan A

 

What we would like to do is buy a full ownership in approximately 2 years. My wife's earnings will be around £35k, and I expect my earnings to be around £45 (£8k salary + dividends).

 

We hope to borrow in the region of £300k and use our equity to spend around £330k and pay off the rest of the debt.

 

If my understanding is correct, debts older than 6 years won't show on our credit history, so we would spend the next two years paying off the more recent debts, so that our credit check is clear (ish). We would clear the old debts with the remortgage.

 

Plan B

 

Our current property is owned 50% and we could buy the other 50% at a good rate from the Housing Association. Because of the work we have done to the house, I hope we could buy the other 50% for around £75k and have full ownership of a house worth between £190 and £200k (at a cost to us of £160k).

 

We would use this as a stepping stone to achieve PLAN A in roughly the same time frame. As the property is currently listed as 'affordable housing' I believe taking full ownership would allow us to potentially sell for more, and open up more options in terms of dealing with lenders, without the restrictions associated with joint ownership properties.

 

Questions

 

1) Is the £6k debt to Cabot likely to affect future borrowing? It doesn't show on a credit check, but Cabot do have a charge against the property.

2) Husband is owner/Director of Ltd Company. Other than waiting for 2 year trading history and maximizing earnings from Company, is there anything else I should be doing over the next two years?

3) Will our defaults 'disappear' from our credit checks at 6 years old? Can they still affect our rating?

4) Is there any debts that should take priority over the others?

5) After April 2018, when I have been trading 1 year, would it be possible to buy the other 50% of our current property with the above credit history, equity and earnings? This could be an opportunity to clear off some of the debts to improve our position for the future.

6) Are their any considerations around 'help to buy' that we could take advantage of now and things we should/shouldn't do to jeopardize any opportunities? For example, I have never owned a house. Might this help me in getting 'help to buy'?

7) Do lenders ask for bank statements? Should we perhaps keep any unhealthy payments out of our main bank accounts?

8) Do we need to be concerned about our ages? 38 and 44?

 

I would appreciate any thoughts, comments or suggestions. We are committed to paying off our debts and hopeful that we can achieve our goals.

 

Thank you.

[fkofilee]

..

 

1) Is the £6k debt to Cabot likely to affect future borrowing? It doesn't show on a credit check, but Cabot do have a charge against the property. Yes

2) Husband is owner/Director of Ltd Company. Other than waiting for 2 year trading history and maximizing earnings from Company, is there anything else I should be doing over the next two years?

3) Will our defaults 'disappear' from our credit checks at 6 years old? Can they still affect our rating? Yes, 6 years after date of default, after this date, they cant be readded etc

4) Is there any debts that should take priority over the others? Yes - Council tax, Rent, Water, Electric etc - Bare in mind that NON DEFAULTED accounts will not be removed after 6 years. They will be removed either if the firm removes it themselves or removes it after 6 years.

5) After April 2018, when I have been trading 1 year, would it be possible to buy the other 50% of our current property with the above credit history, equity and earnings? This could be an opportunity to clear off some of the debts to improve our position for the future. Hard to say - Try looking at a Mortgage Broker

6) Are their any considerations around 'help to buy' that we could take advantage of now and things we should/shouldn't do to jeopardize any opportunities? For example, I have never owned a house. Might this help me in getting 'help to buy'? Unable to advise - Once again consider seeking advice from Mort Brokers as they will check panels of lenders etc

7) Do lenders ask for bank statements? Should we perhaps keep any unhealthy payments out of our main bank accounts? Yes!! Oh HELL YES!! Rule changes for Mortgages means that they may ask for 3 months / 6 months / 1 years worth of either payslips or Bank Statements / Both. Financial Rules were put in place to prevent another financial downturn seen in 2007/2008

8) Do we need to be concerned about our ages? 38 and 44? Depends on the loan term - Once again - Brokers may be best to check with

[renegadeimp]

Also you won't have ever owed that debt to Cabot. They don't chase enforceable debts. You were bluffed and fell for it

[showmethemundy]

Also you won't have ever owed that debt to Cabot. They don't chase enforceable debts. You were bluffed and fell for it

 

Under my instruction, my wife took Cabot to court to remove the CCJ as the debt was statute bared at the time the CCJ was granted.

 

The court rules against her and allowed Cabot to place a charge on her property.

 

The judge (?) was very understanding to the point with agreeing with our interpretation of the law,

 

but still took the view of "you borrowed the money, you pay it back".

[renegadeimp]

Then y ou used a bad defense, or the judge was seriously wrong. Once a debt is SB, NOTHING can un SB it, only a major change of law can. A judge definitley cant

[dx100uk]

huh?

if it was statute barred at the time the claimform was issued its still statute barred

not even a judge can unbar a statute barred debt...

somethings not right here

[showmethemundy]

Cabot said that a payment was made 5 y 11m before the CCJ, but we proved through bank statements that we never made that payment. Court didn't accept our evidence.

 

Can we leave this please, as I don't want to distract from the OP

[renegadeimp]

Cabot said that a payment was made 5 y 11m before the CCJ, but we proved through bank statements that we never made that payment. Court didn't accept our evidence.

 

Can we leave this please, as I don't want to distract from the OP

 

Thats cabots normal procedude. They lied. You got a crooked judge and let it slide.

 

And its cool. all info is good info when it comes to dealing with DCA's

[dx100uk]

Hi All

 

New to forums, so please move if I have posted in the wrong place.

 

Thank you in advance for any comments.

 

Introduction

 

My wife (38) and I (44) are currently in a joint ownership mortgaged property, in a debt management plan, with defaults on bank loans and credit cards. We both have good earning potential and hope to remortgage in approximately 2 years (after April 2019/20) to achieve full ownership.

 

Current financial position

 

Our current property is in my wife's name. It's a joint ownership (50%) 3 bed semi. Our 50% is valued at around £85k. We have £18k o/s on the mortgage and a further £6k charge on the property from Cabot re: an old CCJ that is no longer on the wife's credit history. Approximately £60k equity.

 

Wife is in long term permanent employment earning £32k per annum.

 

Husband is Director of own Ltd Company. Currently in year 1 with expected earnings of around £28k (£8k salary + £20 dividends). First year end is April 2018.

 

Current debt position

 

We currently have around £20k of debt under a debt management plan. Two years ago my wife was ill and I was made redundant. Rather than bury our heads in the sand, we tried to deal with our creditors, asking for payment holidays or help with interest payments. We tried to consolidate but none were helpful. Despite being pro-active, they all served us with defaults.

 

Below are the debts showing as default on our credit check. The bottom two credit cards show as "up to date" but when you drill down it shows the payment with "DM" next to it for debt management.

 

 

Type of debt Amount £ Default date 6 year date

Bank o/d 742 28/08/2012 28/08/2018

Bank o/d 998 29/08/2012 29/08/2018

Bank Loan ,627 31/12/2012 31/12/2018

Credit Card 2,617 29/01/2013 29/01/2019

Credit Card 1,716 27/03/2013 27/03/2019

Credit Card 424 06/12/2013 06/12/2019

Credit Card 1,494 28/12/2016 28/12/2022

Credit Card 1,948 28/12/2016 28/12/2022

Bank o/d 325 22/02/2017 22/02/2023

Credit Card 1,819 up to date - DM

Credit Card 4,013 up to date - DM

 

20,723

 

The default date is from our credit reports and I have added on 6 years as I believe/hope the debts will drop off our credit reports after this date (?).

 

Plan A

 

What we would like to do is buy a full ownership in approximately 2 years. My wife's earnings will be around £35k, and I expect my earnings to be around £45 (£8k salary + dividends).

 

We hope to borrow in the region of £300k and use our equity to spend around £330k and pay off the rest of the debt.

 

If my understanding is correct, debts older than 6 years won't show on our credit history, so we would spend the next two years paying off the more recent debts, so that our credit check is clear (ish). We would clear the old debts with the remortgage.

 

Plan B

 

Our current property is owned 50% and we could buy the other 50% at a good rate from the Housing Association. Because of the work we have done to the house, I hope we could buy the other 50% for around £75k and have full ownership of a house worth between £190 and £200k (at a cost to us of £160k).

 

We would use this as a stepping stone to achieve PLAN A in roughly the same time frame. As the property is currently listed as 'affordable housing' I believe taking full ownership would allow us to potentially sell for more, and open up more options in terms of dealing with lenders, without the restrictions associated with joint ownership properties.

 

Questions

 

1) Is the £6k debt to Cabot likely to affect future borrowing? It doesn't show on a credit check, but Cabot do have a charge against the property.

2) Husband is owner/Director of Ltd Company. Other than waiting for 2 year trading history and maximizing earnings from Company, is there anything else I should be doing over the next two years?

3) Will our defaults 'disappear' from our credit checks at 6 years old? Can they still affect our rating?

4) Is there any debts that should take priority over the others?

5) After April 2018, when I have been trading 1 year, would it be possible to buy the other 50% of our current property with the above credit history, equity and earnings? This could be an opportunity to clear off some of the debts to improve our position for the future.

6) Are their any considerations around 'help to buy' that we could take advantage of now and things we should/shouldn't do to jeopardize any opportunities? For example, I have never owned a house. Might this help me in getting 'help to buy'?

7) Do lenders ask for bank statements? Should we perhaps keep any unhealthy payments out of our main bank accounts?

8) Do we need to be concerned about our ages? 38 and 44?

 

I would appreciate any thoughts, comments or suggestions. We are committed to paying off our debts and hopeful that we can achieve our goals.

 

Thank you.

 

1) nope

2. doubt it

3.nope

4. things that keep a roof over your head..the rest drop off anyway...

5.cant see why not

6.6.not my game

7. they'll ask for all accounts so you cant hide stuff.

8.nope

 

as for cabot CCJ..

and that judge had never experienced cabot stating that before...urmm..its their usual MO to an SB defence.

and ofcourse you did put them to strict proof in your witness statement didn't you to prove who.by & when the phantom payment was made?

[brassnecked]

Might be time to look at set aside on SB.

[ericsbrother]

on point 6 you wont get any help becaue you own the other half of the house.

 

Married couples are treated as sharing assets regardless of whose name is on the deeds.

 

What would you do, have your name as joint tenant so each of you own 50% but then tell mortgage co that there is another interested party so they wouldnt give you a mortgage based on joint icomes or assets.

 

As for plan A or B.

you say property is worth approx £190k

but you want to borrow £300k with this as equity and £20k of debt to boot.

 

No-one will lend you that money so go for plan B,

get yourselves on an even keel and if you see somewhere else that you wold like to buy then enquire about a suitable mortgage for that property when the time comes.