Clear debts before applying or apply with debts?

monkeyboy72

Hi – I’ve asked a similar question to this before but as its now only a few months until I start the ball rolling I wanted to get something clarified in my head.

Basically I owe around £20000 on x2 credit cards and x2 loans (unsecured). I have lived in my property for 10 years and have built up around £50000 equity.

The previous question I asked concerned ‘taking’ £20000 from the equity on sale day and clearing the cards/loans and the other £30000 as deposit for new place. Previous replies said this should be fine.

I cant quite get it out of my mind that a lender will see this £20000 as think of me as a risk (even though I’m paying it off and DEFINITELY closing the accounts) Personally I think they would they may think ‘why does he owe so much in cards/loans’ and either offer me a lower amount or no amount at all, even though the debts will be satisfied.

I’m seriously considering selling my property then pay of my cards/loans, move into a short term rental wait a few months till everything is clear etc then apply for a mortgage totally debt free and with £30000 deposit.

What do you think?

Dave_Ham

Hi,

Did not see your last post about this, although this strikes me that you are asking of the information you received last time is actually the truth.

Assuming last time that you were told that so long as you passed the credit score, it is ok to pay out of completion funds then this is a fact.

Whether the lender takes into consideration your unsecured debts as part of the credit scoring is another matter.

The $64,000 question is that have you been making the unsecured payments on time and therefore positively or negatively affected your credit score.

Good luck with whatever way you choose to go

Thrugelmir

monkeyboy72 wrote: »

I’m seriously considering selling my property then pay of my cards/loans, move into a short term rental wait a few months till everything is clear etc then apply for a mortgage totally debt free and with £30000 deposit.

Certainly no harm in examining this route. The quicker the debt is repaid the sooner your credit rating will improve. Along with the fact that all the stress and worry will disappear as well.

monkeyboy72

Thanks for your replies, yes sorry I forgot to say I have never missed a payment my credit score is 930 on experian and the other two, it says it could be higher if I didn't have so much owing and credit accounts which is what got me thinking

DVardysShadow

monkeyboy72 wrote: »

I’m seriously considering selling my property then pay of my cards/loans, move into a short term rental wait a few months till everything is clear etc then apply for a mortgage totally debt free and with £30000 deposit.

What do you think?

I would say stay where you are and make in roads into the debt for a year or so. This will show that you are on top of the situation. Then remortgage.

If you are going to say that with the debts you have, you will not be able to make in roads, then you won't look good for a remortgage. If this is the case, repost on the DebtFreeWannabe forum where you will probably be told to post a Statement of Affairs. This will be the best way to work out the right solution for your problem.