Using equity from sale to pay off loans
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spriggsy
Posts: 35 Forumite
Hi guys,
We are looking at moving house at some point in the future.
We've got a couple of personal loans which at the moment limits the amount we can borrow.
I've done a few of the 'how much can i borrow calculators' and noticed that it makes a massive difference depending on whether you have personal debt or not. (i.e. paying off a 10k loan would mean the bank could lend 40k more on a mortgage)
The idea is that we would use some of the equity from the sale of our current house to pay off those loans and therefore allow us the opportunity to borrow more on the mortgage.
My question is, can we apply for a mortgage on the basis that those loans will be paid off with some of the equity, or will the banks only go on your current situation?
I should also point out that with the amount of equity left over, there would be enough to cover deposit and various fees for the sale and new purchase.
Thanks in advance.
We are looking at moving house at some point in the future.
We've got a couple of personal loans which at the moment limits the amount we can borrow.
I've done a few of the 'how much can i borrow calculators' and noticed that it makes a massive difference depending on whether you have personal debt or not. (i.e. paying off a 10k loan would mean the bank could lend 40k more on a mortgage)
The idea is that we would use some of the equity from the sale of our current house to pay off those loans and therefore allow us the opportunity to borrow more on the mortgage.
My question is, can we apply for a mortgage on the basis that those loans will be paid off with some of the equity, or will the banks only go on your current situation?
I should also point out that with the amount of equity left over, there would be enough to cover deposit and various fees for the sale and new purchase.
Thanks in advance.
0
Comments
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Yes. Although one or two lenders won't ignore anything which is still visible on your credit file, so be careful with lender selection.My question is, can we apply for a mortgage on the basis that those loans will be paid off with some of the equity, or will the banks only go on your current situation?I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
The idea is that we would use some of the equity from the sale of our current house to pay off those loans and therefore allow us the opportunity to borrow more on the mortgage.
That's a form of debt consolidation. Lenders internal policies will determine whether this is acceptable or not.0 -
Thrugelmir wrote: »That's a form of debt consolidation. Lenders internal policies will determine whether this is acceptable or not.
Is it though, because we are using equity 'earned' on the sale of the house to clear debt, not borrowing more to clear the debt? (If you get what I mean)
Or is it the intention to clear debt to be able to borrow more seen as a kind of debt consolidation?0
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