New mortgage - does it make any difference.....

aliasojo

.....if you have an existing mortgage or a cleared one?

Our mortgage is almost paid off but we do still have credit card debt. The cc debt is continually on low or no interest deals which is why we have concentrated on paying off our mortgage first.

I was looking forward to being mortgage free but OH has thrown a spanner in the works by saying he wants to move as a new job has come up which he could transfer to.

So query is, would it make any difference whether we had no mortgage and some cc debt as opposed to some mortgage and no cc debt?

I thought I read a post on here saying it was best to have a mortgage already when applying for another but I can't find it and I may have read it wrongly.

herbiesjp

If you are looking to buy a new property whilst having an exisiting mortgage you need to be aware of a few things:

1) If you are going to let out the existing property let the current lender know, as well as buildings insurance provider

2) The new lender may well ignore that mortgage if the rental income you will receive will be more than 130% of the mortgage payment.

Your income will need to be able to support any mortgage and any other financial commitments you may have i.e. credit cards, loans HP etc.

aliasojo

Thanks herbie but we'd be selling this place I think.

I just wondered if a new mortgage application looked better if you still had a running mortgage (under 1K) at time of applying.

Kind of along the lines of 'people who have no debt sometimes find it hard to be accepted for credit as they have no track record' type thing and folk who do have managed debt usually can get more fairly easily.

On an application is there any difference to how a lender would feel seeing <1K owed to existing mortgage and 10K credit card debt for example as opposed to 10k mortgage and <1K cc debt?

Or is debt just debt to a lender and I'm just cloudying the waters unnecessarily?

pavlovs_dog

i understand what you are getting at, but havent got a clue what the answer is

just wanted to wish you good luck with it all :beer:

herbiesjp

Well if you are selling your place and moving to a new place, the exisiting mortgage would not come into the affordability calculation as you would be redeeming that liability.

To be honest it will not make that much difference having a small mortgage or not at this point, as it sounds like you have built up a sound credit history on which most lenders would be happy to lend

aliasojo

Thanks pavlov......I refuse to let OH get too carried away though.....only considering options at the moment, lol.

Herbie...thank you to you too. I had a feeling I was maybe cloudying the waters as mentioned but being a practical logical sort I always like to check everything. To the point of being extreme sometimes.