Sell house to rebuild credit file??
Discussion
Looking for some advice and with a forward plan I have and whether it will be the most efficient way of helping me and my wife getting our own mortgage and onto the housing ladder on our own.
We currently have a property with circa £140k equity tied up in it.
The property’s mortgage is in my parents’ name as at the time we could and still can’t get a mortgage due to poor history.
The wife has around £15k on credit and no ccjs or defaults.
I have around £2k on credit and 2 defaults but no ccjs.
Between us our credit files are pretty poor as you can guess.
The plan is to sell our house which will release the equity, and rent for 12-18ths while we rebuild our credit files. We will both pay off all ours debts, reduce what’s on credit to zero and put the remaining circa £100k in savings and ISAs for 12-18months. We hope to be able to rebuild our credit files enough to solely get a mortgage in 18 months’ time with rebuilt files and £100k deposit.
My question is, would this first be enough to re-build our credit files and secondly, would this be the most efficient way of doing it?
We currently have a property with circa £140k equity tied up in it.
The property’s mortgage is in my parents’ name as at the time we could and still can’t get a mortgage due to poor history.
The wife has around £15k on credit and no ccjs or defaults.
I have around £2k on credit and 2 defaults but no ccjs.
Between us our credit files are pretty poor as you can guess.
The plan is to sell our house which will release the equity, and rent for 12-18ths while we rebuild our credit files. We will both pay off all ours debts, reduce what’s on credit to zero and put the remaining circa £100k in savings and ISAs for 12-18months. We hope to be able to rebuild our credit files enough to solely get a mortgage in 18 months’ time with rebuilt files and £100k deposit.
My question is, would this first be enough to re-build our credit files and secondly, would this be the most efficient way of doing it?
deanogtv said:
Looking for some advice and with a forward plan I have and whether it will be the most efficient way of helping me and my wife getting our own mortgage and onto the housing ladder on our own.
We currently have a property with circa £140k equity tied up in it.
The property’s mortgage is in my parents’ name as at the time we could and still can’t get a mortgage due to poor history.
The wife has around £15k on credit and no ccjs or defaults.
I have around £2k on credit and 2 defaults but no ccjs.
Between us our credit files are pretty poor as you can guess.
The plan is to sell our house which will release the equity, and rent for 12-18ths while we rebuild our credit files. We will both pay off all ours debts, reduce what’s on credit to zero and put the remaining circa £100k in savings and ISAs for 12-18months. We hope to be able to rebuild our credit files enough to solely get a mortgage in 18 months’ time with rebuilt files and £100k deposit.
My question is, would this first be enough to re-build our credit files and secondly, would this be the most efficient way of doing it?
How much is the property worth?We currently have a property with circa £140k equity tied up in it.
The property’s mortgage is in my parents’ name as at the time we could and still can’t get a mortgage due to poor history.
The wife has around £15k on credit and no ccjs or defaults.
I have around £2k on credit and 2 defaults but no ccjs.
Between us our credit files are pretty poor as you can guess.
The plan is to sell our house which will release the equity, and rent for 12-18ths while we rebuild our credit files. We will both pay off all ours debts, reduce what’s on credit to zero and put the remaining circa £100k in savings and ISAs for 12-18months. We hope to be able to rebuild our credit files enough to solely get a mortgage in 18 months’ time with rebuilt files and £100k deposit.
My question is, would this first be enough to re-build our credit files and secondly, would this be the most efficient way of doing it?
Were any of the defaults in the last 2 years?
deanogtv said:
Property is worth £310-325 on current valuations.
No, last default was 4 years ago
So why not remortgage (technically it wouldn't be a remortgage, you would be buying the property from your parents) with a lender who will accept the defaults, raise funds to pay off the debts and rebuild your credit file whilst not having to sell your house? Then in two years time your defaults will have dropped off your credit file entirely as they only show up for six years.....No, last default was 4 years ago
The biggest positive impact on your credit file is having and successfully maintaining a mortgage and being a homeowner.....
deanogtv said:
we did consider this but would we need to pay stamp duty as the house is technically being bought and sold?? that was the turn off for us.
Bought and sold???No, you don't pay stamp duty on a remortgage. You only pay stamp duty if you transfer the legal title of your home to someone else.
deanogtv said:
we did consider this but would we need to pay stamp duty as the house is technically being bought and sold?? that was the turn off for us.
OK... so your parents own the house and it is registered in their names (I presume).AFAIK Stamp Duty will be payable... however with your plan you are only deferring a stamp duty bill for 12-18 months if you plan to buy then. You may clear some debts in the interim, but what if property prices increase between now and then... it is pretty unlikely that bank account interest is going to bridge that gap.
deanogtv said:
Looking for some advice and with a forward plan I have and whether it will be the most efficient way of helping me and my wife getting our own mortgage and onto the housing ladder on our own.
We currently have a property with circa £140k equity tied up in it.
The property’s mortgage is in my parents’ name as at the time we could and still can’t get a mortgage due to poor history.
The wife has around £15k on credit and no ccjs or defaults.
I have around £2k on credit and 2 defaults but no ccjs.
Between us our credit files are pretty poor as you can guess.
The plan is to sell our house which will release the equity, and rent for 12-18ths while we rebuild our credit files. We will both pay off all ours debts, reduce what’s on credit to zero and put the remaining circa £100k in savings and ISAs for 12-18months. We hope to be able to rebuild our credit files enough to solely get a mortgage in 18 months’ time with rebuilt files and £100k deposit.
My question is, would this first be enough to re-build our credit files and secondly, would this be the most efficient way of doing it?
I think you are taking a sledgehammer to crack a nut here. You have £17k worth of debt but £140k of equity in the house.We currently have a property with circa £140k equity tied up in it.
The property’s mortgage is in my parents’ name as at the time we could and still can’t get a mortgage due to poor history.
The wife has around £15k on credit and no ccjs or defaults.
I have around £2k on credit and 2 defaults but no ccjs.
Between us our credit files are pretty poor as you can guess.
The plan is to sell our house which will release the equity, and rent for 12-18ths while we rebuild our credit files. We will both pay off all ours debts, reduce what’s on credit to zero and put the remaining circa £100k in savings and ISAs for 12-18months. We hope to be able to rebuild our credit files enough to solely get a mortgage in 18 months’ time with rebuilt files and £100k deposit.
My question is, would this first be enough to re-build our credit files and secondly, would this be the most efficient way of doing it?
Assuming your parents are happy to assist (and you have no other debts) you have many options.
For example, you could apply for a mortgage to buy the house at a realistic value (let's say this is the lower of your valuations - £310k).
You could surely raise a 60% Loan To Value mortgage on this amount of borrowing. This would deliver the £170k outstanding to your parents (based on there being £140k of equity) and leave £16k free (that your parents could gift back to you to pay off the majority of your debts).
Yes you would have to pay stamp duty of £5,500 but as has already been said you will have to pay stamp duty when you buy in the future in any case, so this is not an additional cost.
Selling, renting, buying back in in 12-18 months time seems very drastic under the circumstances.
Why would you sell it?
What is your credit score?
I've got £20k debt and a default from a couple of years ago but my score is around 900. As long as you make the payments then your score shouldn't be bad.
Concentrate on paying off of one if you can, then the interest free/ low interest transfers come rolling in.
What is your credit score?
I've got £20k debt and a default from a couple of years ago but my score is around 900. As long as you make the payments then your score shouldn't be bad.
Concentrate on paying off of one if you can, then the interest free/ low interest transfers come rolling in.
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