First time buyer with 20k debt but not bad debt

louisaL

As someone with alot of 'bad' debts i.e with debt collectors plus ccj's I was able to get a mortgage (5yrs ago).

My friend earns more than I did at the time of getting my mortgage and has 20k outstanding on credit cards/catalogues and bank loans but she has always kept up with her payments and pays over the min payment.

We rang a mortgage broker the other day who said no one would accept her although she's done an expenditure list (as if she lived in her own place (at the moment her and her husband live rent free with her mum at 32yrs old) and had a surplus to pay her min repayments) but they still said no.

I understand lenders aren't lending like they use to but 'normally' would it be likely she could get a mortgage.

GMS

Does she have a deposit?

The debts would be taken into account by lenders for affordability purposes so unless she earns a substantial salary 20k is likely to have a huge impact.

How much does she want to borrow? What purchase price? Income?

somethingcorporate

Minimum repayments (or just over) is not usually a sufficient buffer in finances - these can often take years or even decades to pay back at the minimum rates. Deal with the debt first then consider getting a mortgage.

Thrugelmir

louisaL wrote: »

I understand lenders aren't lending like they use to but 'normally' would it be likely she could get a mortgage.

The lending market has changed. So normality is that of an era a generation have never experienced. When lenders based their decisions on sensible criteria. Not in a drive to grow their business ever bigger.

Suggest that she tackles those debts and learns to live without credit. As the only winners at the moment are the finance houses.

CLAPTON

very difficult to understand

what is their income
what are their savings (for the deposit)
are they buying jointly
what are his circumstances

property.advert

Can't really have a deposit if they have 20k debt

Also empirical evidence that they are living beyond their means

I wouldn't lend them the steam off my ...

hcb42

http://www.moneysavingexpert.com/cards/minimum-repayments-credit-card#results

show your friend that, will take 43 years to pay off by paying off minimum payments.

The fact they are living at home with Mom at 32 and still not able to clear this and save a decent deposit should be ringing alarm bells.

They need a year or two to get this under control I would suggest.

property.advert

hcb42 wrote: »

http://www.moneysavingexpert.com/cards/minimum-repayments-credit-card#results

show your friend that, will take 43 years to pay off by paying off minimum payments.

The fact they are living at home with Mom at 32 and still not able to clear this and save a decent deposit should be ringing alarm bells.

They need a year or two to get this under control I would suggest.

Very good point.

Classic example of the difference between the theoretical amount of money available each month based on headline salary figures / household bills and the truth, the real truth, that they simply overspend each month and have forgotten about the hundreds of pounds each month they waste on entertainment for example.

foreversummer

All debt is debt, there is no good debt or bad debt. The sooner this gets back into folks' psyche the better really.

I'm not unsympathetic, just a realist.

Foreversummer

dlk

They are living rent free but have still managed to live beyond their means to the tune of £20,000! Of course no-one will lend them anything. If they owed £20k now and only £10k next year then they've maybe proved they can manage their finances and afford a mortgage but right now evidence suggests they can't.

opinions4u

Having well conducted credit will not stop you getting a mortgage.

It will reduce the amount you can borrow though.

Having no deposit will stop you getting a mortgage.

I agree with all the other concerns about £20k of unsecured debts. If the balances aren't being reduced your friend actually has significant problems.