Likely rates and best chance to secure mortgage

CheeseOnToast

Hi gang,

As usual, need a bit of advice!

The situation is basically this -

• I have 34.5K in cash available
• I have 25K in unsecured debts

I have had an offer accepted on a property at 170K.

I can either put 10% deposit (17K) down, and leave myself with approx 12K of unsecured debt. I'm guessing my rate on 90%LTV will 4.99% if I'm lucky?

Or I can put 15% deposit (25.5K) down, leaving me with approx 20K in unsecured debt, which obviously will be tighter on the affordability scale, but could result in rates as low as 3.5-4%?

I am 27 years old and earn £50,600 basic. I would like to fix my mortgage and have the term over 30 years.

What would you do? I am tempted to go down the 10% route to clear as much unsecured debt as possible, and hoping that the LTV/rate market will move in my favour in a couple of years time, but I am not sure if any of the decent rate lenders would want me with 20K outstanding.

I can probably borrow another couple of grand off a family member in the mean time if it would help secure a loan.

Cheers,

Phil

Thrugelmir

Obvious question why not clear the debts?

Then build up your deposit.

From a lender's perspective you aren't demonstrating good personal financial management. Despite earning a well above average salary.

CheeseOnToast

Unfortunately ran most of the debts whilst not earning the salary I earn now. And my wife is a university student so lots of bumps along the way.

But I fully agree with you. I have to say though, 15K of the money was spent on my car etc. which I guess is just one of those things.

We have found the perfect house and we are currently renting as we sold our old place last year to be in this position.

The wife is going to go mental if I don't get this place

Thrugelmir

CheeseOnToast wrote: »

But I fully agree with you. I have to say though, 15K of the money was spent on my car etc. which I guess is just one of those things.

Is the car on a personal loan ?

CheeseOnToast

No, I bought the car on multiple credit cards. Is that better or worse?

Thrugelmir

None. As its on credit cards though you have more flexibility.

I would opt for the 90% LTV route and repay as much debt as possible.

The only guaranteed route of improving your LTV is to overpay your mortgage as and when you can afford to do so. In the current economic climate the future is uncertain. So better to dictate your destiny than speculatively rely on the market.

neverdespairgirl

Are you sure you'll get a mortgage anywhere near that much, with all the debt?

CheeseOnToast

Halifax gave me AIP for 202K based on 13K debt outstanding after the mortgage.

CheeseOnToast

Anyone got any best recommendations for 90% LTV at the moment?

Cheers