Best to pay off debt first ? before applying

little_miss_muppet_face

This is our situation, our house is up for sale just now, we should make £30k on it.
Our debts are as follows;
Husband loan 1 - 10k (2 years remaining) - this is his car loan
Husband Loan 2 - 3.8k (2 years remaining) - new bathroom
My Loan - 12.5k (3.5 years remaining) - my car loan


I have 4k in our bank account, we want to buy a house for 200k, should i use the 4k in the bank to pay off Loan number 2, so we only have 1 car loan each but will leave us with no money apart from the sale of our house,
We could apply for a 85% mortgage which would use up the 30k equity we make but leaves us little more to use for the move,.
but we have enough left over each month to put at least £1500 every month towards fees, carpets etc

My husband earns 52k and i earn 26k, Can you advise what we are best doing, as in keep the 4000 in the bank but apply for a new mortgage with 3 loans.. we need to be approved for £170k @ 85% LTV(or 180k 90%), is that possible on combined income of £78k ?, or pay off 1 loan and apply with only 1 loan each, does anyone have experience of what amount of debt you are able to apply with..

Or should we try and get a 90% mortgage but obviously will cost us more in the short term...
but will leave us a bit extra money.. How easy is it to get a 90% mortgage?,
we plan to go for 85% but will leave us with little money to move with..
sorry its a bit jumbled up .. i hope it makes sense.

Thrugelmir

Affording the mortgage is not the issue. Its more a question of do you want to pay a high rate of interest to secure the mortgage. Along with paying high rates of interest on your loans. As with £1,500 "free" a month it wouldn't take long to clear some debt and build your savings.

The £4k you have in the bank won't cover the total costs of moving.

getmore4less

Longer term(or even now) I would review your reliance on debt and expensives cars. High risk stratagy if income drops

we have enough left over each month to put at least £1500 every month towards fees, carpets etc

Why only £4k savings?

little_miss_muppet_face

Because we like holidaying in Florida..... and new cars...and nights out.. naughty i know and we are paying for it now..basically we spend pretty much all we earn..

I guess its time to knuckle down...

Thrugelmir

little_miss_muppet_face wrote: »

..basically we spend pretty much all we earn..

I guess its time to knuckle down...

And more. As you've nothing to show for all your hard work.

Your choice. As unlike many people that post on this forum you have the ability to do something about it. At the moment.

little_miss_muppet_face

Yes you are right.. and i am taking note and am very much so going to be tackling it....


Thanks