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In debt and hoping to move house...
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renzo
Posts: 9 Forumite
Hi
Long time lurker, first time poster!
Over the course of the last couple of years I've had some pretty bad luck with things and have managed to rack up a fair amount of debt. Luckily (?) my credit rating is pretty good so I've always been able to get extra credit cards to pay for things and it's now at the point where I have 20k spread over 3 cards.
I'm a homeowner with around 30k of equity in the house and I've started a new job in a different town so the house is on the market. House prices where I'm moving to are a fair bit higher so I know I'm going to have to borrow more.
I'm also thankfully in the position where my new role allows me to comfortably pay my existing mortgage, plus debt payments and all my other monthly commitments although I've always kept up with minimum payments up until now some months have been a bit hairy near the end!
My main query is around what I should do with the 20k debt and what the lenders would look upon more favourably. Should I look to take out a loan prior to applying for a new mortgage or be better off applying for it, confessing to having some pretty horrendous debts and borrowing more to clear the debts onto the mortgage?
Or is it option 3, it all depends on my circumstances? Thanks!
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Long time lurker, first time poster!
Over the course of the last couple of years I've had some pretty bad luck with things and have managed to rack up a fair amount of debt. Luckily (?) my credit rating is pretty good so I've always been able to get extra credit cards to pay for things and it's now at the point where I have 20k spread over 3 cards.
I'm a homeowner with around 30k of equity in the house and I've started a new job in a different town so the house is on the market. House prices where I'm moving to are a fair bit higher so I know I'm going to have to borrow more.
I'm also thankfully in the position where my new role allows me to comfortably pay my existing mortgage, plus debt payments and all my other monthly commitments although I've always kept up with minimum payments up until now some months have been a bit hairy near the end!
My main query is around what I should do with the 20k debt and what the lenders would look upon more favourably. Should I look to take out a loan prior to applying for a new mortgage or be better off applying for it, confessing to having some pretty horrendous debts and borrowing more to clear the debts onto the mortgage?
Or is it option 3, it all depends on my circumstances? Thanks!
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Comments
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Hi
I guess it all depends on your circumstances.
If you repaid the debt with your existing equity then presumably after selling/moving costs you probably wouldn't have sufficient deposit for a new property?
I think a lot of mortgage lenders do prefer unsecured credit to be on lonas rather than credit cards, however obviously if you have a large monthly loan repayment that will impact on affordability calculations for a new mortgage.
Might be worth getting some advice from a mortgage broker perhaps?A smile enriches those who receive without making poorer those who giveor "It costs nowt to be nice"0 -
From our experience, the provider of the new mortgage will look at your overall debt level. We had assumed we'd be able to borrow 3 times our joint salary, as we knew we'd be able to put up a decent deposit from the sale of my previous house. My partner had a £16K loan at the time. We explained it was our genuine intention to repay the 16K with the profit on my house as soon as it sold but they wouldn't accept 'intentions' & so worked out 3 times our joint salaries minus the £16k. I think it's really just as Tixy says, to take monthly affordability into account before they agree to lend.2025's challenges: 1) To fill our 10 Savings Pots to their healthiest level ever
2) To read 100 books (29/100)
"Life can only be understood backwards but it must be lived forwards" (Soren Kirkegaard 1813-55)0 -
Hi
Thanks for the replies, really appreciate it. I'll get a mortgage appointment sorted and see how it goes. Releasing equity seems an obvious choice but the bigger deposit the better the rates.
Looking back some of the spending was avoidable and that's the galling thing. Taking out a loan of 20k 'just' to pay off debt is a depressing thought. Hopefully the wake up call I need to manage my money better.
Thanks again0 -
Looking back some of the spending was avoidable and that's the galling thing.
Tell me about it.
I finished up with a £10,000+ loan, to pay off a couple of Credit Cards, a Store Card and an overdraft.
What had I got to show for the debts on the Credit Cards, Store Card and overdraft?
You're absolutely right, NOTHING.0 -
Had a meeting with a mortgage advisor today and they recommended consolidating the debt onto the mortgage.
The explanation being that while I may currently have the funds to pay the mortgage and an additional loan the risk is reduced (and profits increased no doubt!) to the lender if I consolidate. If things do happen to go wrong with work rather than having to find payments for a mortgage and a loan I'm now left with one payment to service.
Now to sell the house!0
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