Remortgage with debt

Millie321

Hi

We have 3 children and a hefty 30k in debt. We realise we are spiralling out of control and need to down size our house to pay off the debt. We have 100k equity in our property so would like to use some of this to pay off our debt and the rest for a deposit on a new house, getting a mortgage of similar amount which is less than 4times our income anyway.

My question is will any mortgage providers accept that the debts will be gone upon sale of house? e.g. not take them into consideration when calculating our new mortage agreement? My current lender will not agree it. Does anyone know any companies which are sympathetic to this sort of situation?

Thank you in advance!

Thrugelmir

Although the mortgage is less than 4 times income. Is it affordable ? That is the question any lender will be asking. So the lower your base income the more likely that they'll say no. They will factor in that you have 3 children to support.

Millie321

It will be easily affordable once the debts are paid off. Impossible with the debts which is why we need to sell up.

But obviously they have no guarantee we will pay the debts off. Will any mortgage provider be able to take this into consideration?

CloudCuckooLand

How about doing it in stages? Get the house sold, pay off the debts.

Give it 6 months to make sure it truly is affordable, rent in the meantime, then buy when your credit history has had time to reflect the debts being cleared.

The improvement in mortgage deal you get could help offset the 6 months of renting. As will £70k earning 2% or 3%.

dktreesea

I don't think it is a very good time to be selling up just now. How about remortgaging your property, maybe checking out other banks to see what they will offer you? HSBC have some very good offers for people with substantial equity in their homes looking to remortgage. Downsizing may sound good, but when you have three children, you probably use the space, and would miss it if it weren't there.

When we sold our house, we rented a flat which has just as much floorspace as the house did, and in some ways is more suitable for our needs. Yet, because we no longer have a garden, it feels like we are under each other's feet.

Also, selling a house (especially if it takes ages because of the current economic climate) and moving can be really stressful. If you remortgaged and paid off your other debts, maybe you could keep your house and wait for better times to sell it.

sashy

Hi, I'm currently remortgaging and consolidating unsecured debt and initially had difficulty partially similar to yours - prospective lenders were happy to consolidate thus wipe off all credit cards but then, in considering affordability added back (ie fictitiously weighting my outgoings) a proportion (HSBC +75%) of those monthly card payments, saying this is because 'I'm at risk of re-offending on cards again'.
I'm applying with Leek United BS who catagorically say they do not add in any part of previous card payments. Further I agree with above posts that lenders look mainly at affordability and LTV. Maybe this is of help.

byebyedebt

A lot of lenders are very cagey about credit card debts. Appreciate what you are trying to do, and in normal economic times, lenders would be happy to lend you the money.

Over the last few months a lot of people have posted simular stories. you are find it very difficult to do what you want to do.

Anyway you can start attcking the debts? Why not pop along to the credit card forum and see what people can suggest.

Millie321

Thanks for the messages.

I'm aware renting would be the sensible option, but the whole thing scares me being 'off the ladder'. I'm also aware that it could take a very long time to sell and we simply cannot afford the payments now.

I did ask my mortgage provider to remortgage also but they wouldn't allow - i may shop around. Although this is also not great because i'm making unsecured loans secured.

Our other option is to do a dmp. But my concerns are the length of time in which we will then be blacklisted and unable to move at all. Is it 6 years after the debts are all cleared? I may post this question in the debt section too.

I have cut spending as much as possible, we have done the budget plans and did post on here many months ago with all our expenditure and got lots of tips. Our biggest hurdles have been my maternity leave obviously earning less and my partners salary being reduced. I'm also pregnant again so earnings will reduce again in the future.

nzmegs

Sorry to point out the obvious - why are you having a fourth child? I understand that accidents happen but this is one which you cannot afford... Perhaps you need to find a way of working from home or similar while looking after the children. Child-minding perhaps? you probabaly need to speak to a broker to see your options or consider some sort of refinancing option on your debts.