Mortgages & Unsecured Debt

alibeano

Help/advice please following a nasty experience;

For years we've been following Martin's advice and stoozing and tarting and changing energy co's and what-have-you. PPI all reclaimed and saved loads - all very successful so far. Yesterday we had a meeting with a mortgage adviser about remortgaging - our current offer runs out at the end of November. He really went to town about 'unsecured debt' and why did we have it etc etc. Even though we're completely on top of it and have systems in place for paying it he said lenders don't take that into account or want to know about it. Some won't even lend to you. The mortgage companies have all the power, can pick and choose who they lend to and we'd be lucky to get an offer. Well that wasn't quite what he said but about the gist of it. I completely got where he was coming from but man he went on and on and on about it. I felt like I'd had the stuffing knocked out of me by the time we left. I've had a look on website here when I got home yesterday but can't see anything about this. Just a bit irked about it all when we know exactly what we're doing. Most of debt is on a Barclaycard 0% to Jan 2014 which had a 1.9% fee - why wouldn't you take it? We've never come across this before.

Has anyone else had this problem? :(:(

ACG

Without know the figures involved its difficult to say whether or not he was going OTT.
However, it doesnt really matter what rate its on, its more a case of the fact you have it and what the repayments are.

Lets say theyre happy to lend you an amount that makes your monthly repayments £1000 a month, however your repayments elsewhere comes to say £400 a month - thats obviously going to eat into the £1000 theyre prepared to lend you and as typically it would cost more on a CC/Loan it would most likely reduce it down my more than £ for £ - if that makes sense?

Different lenders have different views but in the main it will have some effect on what you can lend.

alibeano

thanks for this. as I said I completely got where he was coming from and can even understand the lenders point of view. what I'm wondering is if this has been pointed out in advice on whether to use a 0% card versus a personal loan? or in how to manage your money?

just making other money savers aware.

TonyMMM

You are confusing advice that is relevant to saving money on the interest you pay for the credit you have, with how being in debt affects your overall access to further credit.

The amount of existing debt owed is a factor which reduces the amount of other credit (including mortgages) that lenders may be willing to risk on you...It makes no real difference whether it's on 0% credit card or as a personal loan .

R_P_W

You say you have systems in place for paying it back.....I assume you mean you have the money in a savings account earning interest?

When you apply for a mortgage they will look at you existing debt/commitments and will account for this in their offer (they might offer you less or they may chose to lend nothing at all).

You don't mention what amounts are involved, but for the sake of securing a potentially better mortgage product Vs interest being made in a savings account - why risk it? why not just pay it off and apply with no debt?

Thrugelmir

Do your cash savings exceed the balance owed on your credit cards?

dimbo61

The lending market has changed big style in the last couple of years.
My local mortgage company uses the BUZZ word affordability!!
If you have £20K of debts on a credit card that,s DEBT to them and your monthly payments are taken off your affordability.
You need to show yourself in the best financial position
IE steady income, savings, no debts even on 0% deals and a good deposit or equity in the property.
Even then as some borrowers are finding out the days of easy lending are gone.

alibeano

I'm not querying the lenders position or procedures etc. I just think Martin should have something on the web saying how having balances on cards can impact other areas. And if it's already on the site, fair enough, but I missed it.