Mortgage with credit card debts?

greenchicken

Hi folks!

My partner and I are thinking about trying to buy a small flat in London.
I am 28, he is 24, I have been working for 7 years (my salary is around £30k) and he is starting a full time job this month after graduating, at around £23k.

He has no debt but I have around £6k debt on 3 credit cards - I am only able to afford the minimum repayments on these, and all are on 0% interest. In a few months I get a £3k redundancy payment from work (thankfully I have another job to go to) and plan to pay all of this back on to the card, so will have around £3k debt remaining. I have never missed payments but also about a year ago was refused a new credit card for a balance transfer.

My partner has around £10k savings and his mum has discussed buying half the flat, so we would own the rest. If we ever sell, she would then take half the proceeds and us the other half. So my partner and I need to raise the mortgage to buy our half.

Is it likely I would be declined a mortgage with credit card debt? Would we better waiting until I have fully paid the card debt and let my credit score settle down?

Any advice would be very much appreciated.

ACG

Having a £3k debt isnt ideal but probably wont be a deal breaker.

The bigger issue is that your mum will own half the house. I wouldnt have a clue which lender would accept what your proposing.

greenchicken

Would that be a problem? Sorry I'm a bit new to this whole process.

ACG

From a lenders point of view they have given you a sum of money and its secured against the property.

If you stopped paying they could come to you and your partner for the money. If you didnt have it then they could force the sale of the property.

What your suggesting is your (future...possible) mother in law owns half the property so in theory, she could contest the sale of the property.

Banks arnt interested in getting into litigation battles and running up more costs. They dont want to reposess the property, but if they have to they want it to be a quick and easy process.

greenchicken

I see. So what would you suggest is our best option? If I kept out of the way and he bought it with his mum, would that work? Doubt we have enough deposit between the two of us

[Deleted User]

I am not a mortgage advisor but there are many on here.

I would say that you should get rid of the card first, just makes things clear and easy. You may find the lender will want to know what it is, how much you pay, where it's been spent and son on. I think you will still obtain the mortage though.

I don't think all high street lenders allow mortgages with other family members (not partners) but I know some do, maybe you will just need to choose who you apply for carefuly.

HTH - Good Luck

greenchicken

Thans for the advice, hoping something will work out!

Thrugelmir

greenchicken wrote: »

He has no debt but I have around £6k debt on 3 credit cards - I am only able to afford the minimum repayments on these,

Are you financially secure enough to afford a mortgage? If finances are this tight.

greenchicken

I feel I will be very shortly. We'd rather try and buy now, rather than rent for a long time and get nothing from it, and I don't want to miss the boat if possible if my partner is secure enough to do it. But if it doesn't work out, it's not the end of the world I guess

GMS

Is your Mum looking at paying cash for her half?

If so could she clear your debts and provide the difference as a gifted deposit? That way you could focus on a lower mortgage payment without having to service debts and save to repay your Mum. You could also look at refinancing in the future to release some wuity to pay her back further.

Saying you can only afford minimum payments on 0% credit cards is possibly concerning as what will you do when the 0% rate expires?

All of you need to sit down and go through the figures with your heads not your hearts. If you take your Mum's money and put it into the property then fail to maintain the payments you are risking your Mum's money, not your own. You all need to be comfortable and calculate the risks.

You are lucky to have a Mum who is willing to help you so try to come to the best solution for everybody.

I hope you can get a resolution.

Thrugelmir

greenchicken wrote: »

But if it doesn't work out, it's not the end of the world I guess

A mortgage is a life time committment. So buying a property is not something to enter lightly. (Given that there also related purchase and sales costs as well). Property also requires expenditure on maintenance so not just a question of meeting the monthly mortgage payments.

Far better to clear your debt. Save hard, and buy when the time is right.