Moving House

carolann62

Our house is on the market and we are hoping to make a profit of approximately £130,000. We are selling up so that we can buy a smaller property and cut our mortgage repayments.

We have a loan with £25,000 still owing and various credit card debts.

Should be pay off our debts on selling the house and put down the remaining money on a new house? Or should we put all the money on a new house, and so, have a small mortgage and then borrow extra on the mortgage to repay the debts?

I hope this makes sense.

Our ultlmate aim is to be debt free (all credit cards have been thrown away) and to pay less on the mortgage than we do now.

herbiesjp

This will all depend on your whole scenario.

If you have no outgoings i.e debts, it will mean that a lender can offer you the maximum amount available.

However it will mean that you will have a smaller deposit and bigger mortgage needed. You will need to make sure that your incomes will be sufficient to reah the higher mortgage level and that it is affordable not only now but in the future. I'm guessing that the interest rates will be higher than the mortgage rate, so in terms of affordability, by clearing the debts, you will improve your monthly affordability

HTH