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  • FIRST POST
    • kezzygirl
    • By kezzygirl 15th Jul 17, 11:05 PM
    • 592Posts
    • 649Thanks
    kezzygirl
    wanting to be debt free (again) and saving for a mortgage
    • #1
    • 15th Jul 17, 11:05 PM
    wanting to be debt free (again) and saving for a mortgage 15th Jul 17 at 11:05 PM
    Hi Everyone, I am after some advice regarding reducing our debt and saving for a mortgage. We have previously been in debt to unmanageable levels, but are in a much better position financially now. We had a period of about a year being debt free, but then realised that we need to start rebuilding our credit rating in order to obtain a mortgage in approximately 18mths-2 years.

    The credit card applications began....and here we are. the only bonus is, they are pretty much interest free. We owe:

    Zopa loans £1750 at 5% paying £166 until june next year (we have overpaid this by £600 this month)

    Santander loan -about £5000 at 3.8% paying £176 over three years

    Hubbys lloyds platinum card £3500 0% until august 2018, credit limit £4000

    My lloyds platinum £1500 0% until sept 2019, credit limit £2000

    Our savings:
    my htb isa £2750

    hubbys htb isa £2410

    nationwide flexdirect acct £950 at 5% interest


    My plan is to pay off zopa over the next couple of months- I may withdraw £400 from the flex direct to make more of a dent in this. I am unsure which debt to then clear- hubbys credit card, or santander. I think hubbies card would be better, as the 0% finishes next year, wheras the loan repayment is fixed per month.

    we were saving £450 per month until a couple of months ago, as I have now redirected this to the debts. I am paying the minimum to the savings...£50 month each.

    Anothed question I have is how much debt is 'ok' for a mortgage lender? I know its probably difficult to answer, I am just conscious that our mortgage plans are on hold because we are paying off debt

    any suggestions welcomed, thanks
Page 1
    • Debtslayer
    • By Debtslayer 15th Jul 17, 11:30 PM
    • 431 Posts
    • 600 Thanks
    Debtslayer
    • #2
    • 15th Jul 17, 11:30 PM
    • #2
    • 15th Jul 17, 11:30 PM
    How the debt will affect how much you can borrow will depend on salaries and how much you are looking to borrow.
    I think you need to focus on paying off the debt and learn from your mistakes first before purchasing a house.
    As well as deposit you will need to save enough for purchasing fees and emergency fund
    Current Mortgage 01.10.17 £113,513.88
    MFW Start Mortgage: £114,794.64
    Current MED: 2036 Target MED: 2026
    Overpayment Target for remainder of 2017: £2,000
    Mortgage overpayment savings: £684.80
    MFW No 124
    • La escocesa
    • By La escocesa 16th Jul 17, 7:36 AM
    • 2,926 Posts
    • 18,510 Thanks
    La escocesa
    • #3
    • 16th Jul 17, 7:36 AM
    • #3
    • 16th Jul 17, 7:36 AM
    Hi,

    I got a mortgage with debts - they take the amount you need to service the debt into account when doing the affordability checks as far as I'm aware. They went through my balances on credit cards and then assumed the minimum payment to be 3% so that 3% was taken as the 'expense', same with loans repayments (just the minimum payment even if you are currently paying more).

    You've got nothing to lose by calling a mortgage broker just to see... I called London & Country (one of the ones this site recommends) and they went through everything to say 'you could get a mortgage for £x at the minute. If you paid this off and that off you could get a mortgage for £y'.
    Last edited by La escocesa; 16-07-2017 at 7:43 AM.
    • kezzygirl
    • By kezzygirl 16th Jul 17, 9:56 AM
    • 592 Posts
    • 649 Thanks
    kezzygirl
    • #4
    • 16th Jul 17, 9:56 AM
    • #4
    • 16th Jul 17, 9:56 AM
    Ok, thats great, thanks. I dislike paying the minimum amount, may be if we clear zopa and half of hubby's credit card, then look to start putting more money in the savings again? It just stresses me out having it all sitting there.

    I have the option of bank shifts, which I have been working every other weekend, to clear the debt some more. Its not sustainable though, its exhausting.
    • Butti
    • By Butti 16th Jul 17, 11:44 AM
    • 4,527 Posts
    • 11,945 Thanks
    Butti
    • #5
    • 16th Jul 17, 11:44 AM
    • #5
    • 16th Jul 17, 11:44 AM
    Hi,
    You are wise to pay the debts down. That will taken off in any mortgage decision.

    It will be good to look at your credit report if you can get it. Aswell as flagging up any late payments or other problems, this also highlights minimum payments and cash advances on credit cards. It may be wise to up the minimum payments by a couple of quid just so they disappear on the credit report. I know lenders don't like cash advances on credit cards.

    The reason I managed to get a mortgage was that I highlighted two late payments and explained them. I took the Monica Gellar approach and put everything I needed for the mortgage application in a file ready for my appointment. Basically I helped the mortgage broker/manager to argue my side.
    Debt LBM (08/09) £11,641. (08/12) £22,734. (10/14) £9127 (2/15N )£7790
    Diary 'Butti's journey : A matter of loaf or death'.
    'one day I will be rich and famous…for now I'll just have to settle for being poor and incredibly sexy'. Vimrod Member of MIKE'S MOB NSD June 2/7
    • kezzygirl
    • By kezzygirl 16th Jul 17, 2:19 PM
    • 592 Posts
    • 649 Thanks
    kezzygirl
    • #6
    • 16th Jul 17, 2:19 PM
    • #6
    • 16th Jul 17, 2:19 PM
    Hi,
    You are wise to pay the debts down. That will taken off in any mortgage decision.

    It will be good to look at your credit report if you can get it. Aswell as flagging up any late payments or other problems, this also highlights minimum payments and cash advances on credit cards. It may be wise to up the minimum payments by a couple of quid just so they disappear on the credit report. I know lenders don't like cash advances on credit cards.

    The reason I managed to get a mortgage was that I highlighted two late payments and explained them. I took the Monica Gellar approach and put everything I needed for the mortgage application in a file ready for my appointment. Basically I helped the mortgage broker/manager to argue my side.
    Originally posted by Butti

    I have my credit report through clearscore, noddle and mse credit club haha, I look at them monthly. With cash advances, is this where you transfer cash to your bank account from your credit card? I havent ever done that if so
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