Request for lower mortgage - refused!

Beginagain

Hi

We have just sold our house and are in the process of buying another one which is £40k lower than our existing house.

We have approached our existing mortgage lender (Norwich and Peterborough) and requested a mortgage of £30K instead of our current mortgage of £62k as we will be using the proceeds of the house sale to purchase the house and only need a small mortgage. However, we have been refused the lower mortgage because of the amount of credit card debt I owe (currently £30k). They have said that we can add the debt to the mortgage but that would defeat the object of us moving house!

What we dont understand is that they are happy to give us the higher mortgage but refused the lower one.

Any advice would be appreciated please.

Thanks
Victoria

SPOTTEDCUP

dont mean to sound harsh but you would be struggling to get a mortgage anywhere with 30k c/c debt

dimbo61

Can you overpay the new mortgage and what limits ?
You could use the money you are paying each month in interest payments to the CC companies to overpay your mortgage each month.

Kavanne

Surely a mortgage is at a lower rate than a credit card?! Use 30k of your equity to pay off the CCs and borrow it back on the new mortgage and OVERPAY OVERPAY OVERPAY

LilacPixie

I agree with Kavanne and Dimbo. If the LTV is ok borrow 60k mortgage and pay over the money you would of been paying for the cards into the mortgage account (get a product that allows overpayments without penalty). Your other option would be to speak to a whole of market mortgage adviser who could advise you if it is possible for you to get a 30k mortgage with 30k debt.

Thrugelmir

Are matters more complex than the reasons you've already given?

If you are downsizing take the opportunity to sort your finances out.

Batchy

was you going to use the proceeds of the house sale to pay off the credit cards anyway... some mortgages are not available unless you have a 50k requirement...

Cannon_Fodder

I think it is a question of who controls the debt. In the mind of the lender, I mean.

AFAIK it is possible, rare maybe, but possible for unsecured debts to end up "secured", i.e. a charge against the property, should you default. (quick google found this example; http://www.consumeractiongroup.co.uk/forum/general-debt-issues/121128-charge-against-property.html )


This puts the lender's position, in respect of the house, at risk.

Whereas, putting all the debts in their "hands", knowing only they and you are the possible parties involved will be more reassuring to them.

As others have said, why have CC debt when you have such a small mortgage? Pay a lower rate and get the credit history looking better for re-mortgage next time.

DVardysShadow

angelicauk wrote: »

... We have approached our existing mortgage lender (Norwich and Peterborough) and requested a mortgage of £30K instead of our current mortgage of £62k as we will be using the proceeds of the house sale to purchase the house and only need a small mortgage. However, we have been refused the lower mortgage because of the amount of credit card debt I owe (currently £30k). They have said that we can add the debt to the mortgage but that would defeat the object of us moving house!

If they are playing stoopid, you play stoopid too. Just make sure you can get a mortgage you can overpay, borrow what they tell you to and when you have completed, just pay back the £30k.

PS, don't let 70k burn a hole in your pocket