Advice re equity and paying off debts when applying for new mortgage

monkeyboy72

Good afternoon, I am after some advice which I’m hoping will clear my mind of some thoughts that are racing around my mind!.

First thing is I am looking to sell my flat this spring and buy a new property, I currently have around £15000 unsecured debt and fully intend to clear this with the equity I have made on my flat leaving me another £25000 for a deposit for my next place (based on valuation done on Friday). Does anyone foresee a problem with the bank accepting that the £15000 will be cleared on transfer day, or should I sell the flat move into a friends for a while until the debts show as clear?, I would imagine a few weeks at least to fully close (x2 credit cards x1 personal loan)

I imagine the bank see this sort of this all the time with people taking part of there equity to clear debts and use the rest as a deposit for there next place, I just have a nagging feeling they will focus on the £15000 and this will affect negatively on me, for the amount they will be willing to lend.

Also I assume a solicitor would be able to transfer the £25000 deposit to the sellers’ solicitor and arrange for the other £15000 to be transferred to my lenders or straight to me?

For info I’m a single man 37 who earns £31500 exactly per annum, my credit history is 100%.

Hope someone can give some advice, thanks in advance.

GMS

The debt being repaid will not be taken into account by the new lender. The offer may carry a condition stating debt to be repaid.

Solicitors tend to not get involved in repaying debts.

Totally unneccessary to move into a temporary address.

CLAPTON

the deposit needs to be paid to your solicitor when you exchange contracts; the money from your sale is only available on completion day

a solicitor wouldn't deal with your creditors; he will give you the balance of your money (after taking his fees, estate fees) upon completion

kingstreet

Most lenders' mortgage applications have a little box next to each credit agreement which says "Tick if agreement to be repaid on or before completion."

If you're a bit short on income for your next mortgage, you may see the repayment of these items made a condition of the mortgage. However, I've never seen a lender actually demand to see evidence of repayment.

As Clapton says, your solicitor will simply pay you whatever is left over when you sell and buy and you'll be responsible for repaying the credit.

Try not to run up more unsecured credit when you move. You'll have less equity next time!