Focus on finding a mortgage or paying of existing loans / credit cards?

CharlieH86

Hi

Wonder if anyone could give me some advice please? My partner and myself are starting to look at saving a deposit for a house but he has some outstanding loans and we both have small credit cards which we haven't paid off yet.

Is it better to focus on clearing debts first, trying to find a mortgage once we have the deposit, or instead, paying off outstanding debts first before looking at putting a deposit together?

bigadaj

In most circumstances paying down debt makes most sense. The rate of the debt is normally higher than any savings or indeed a mortgage. You will need a 10% deposit in most instances, but if you have this and money for fees and still hold debt this will reduce the amount you will be allowed to borrow.

If your rent currently is very high and an equivalent mortgage would be cheaper then this might put buying before paying debt as a viable option but you would still need to save up the deposit.