Are lenders likely to give mortgage when I have debt I will to pay with sale profit?

curiousftb

Hello all

Six months after my nightmare with HSBC (thank you again Dave Ham) I'm comfortably ensconced in my new London flat (first time purchase). We've done a huge amount of work, just had it valued and we've added 120k to the value so we want to put it back on the market. We got the bargin of the century because it was badly marketed and a halfway home for drug abusers owned by someone drowning in debt that had to sell even though they lost money. Here's my query - I've run up about 19k in credit card debt doing some of the work (i paid for a further 15k in cash)and worried I won't be able to get another mortgage because of this. However, if I tell them that the profit on my current place would pay the debt off and get my solicitor to guarantee this) are they likely to take a kinder view or is it only about the numbers of my current situation? Im with the woolwich and would ideally like to stay with them. Here are the figures:
Salary £47500 (plus circa 40-60k pa commission)
Debt £19k
Money after sale (conservative estimate if we get less than ea thinks -47k original deposit + 100k profit): £147

Looking to put down 20% on a circa 270k property so obviously will have more than enough loot to pay off debt and put some in the bank - will they agree on that basis? Or is it a total non-starter? Any advice greatly appreciated, you mse wizards you! Thank you!

QBSBuck

I can say I accessed the full salary multiplier with a commitment to pay off existing CC debt from sale of house. My mortgage is with NWide. This still leaves with a sizable deposit, so if the equity is there...

Dave_Ham

You should be fine, the lender will potentially put a mortgage condition that a solicitor has to check that the debt is repaid.

This will depend upon lender though.

I assume you are still tied in with Woolwich so be careful...

theoretica

If you are still tied to your mortgage is porting it to the new property an option?

curiousftb

Hello again all

Thank you for the advice, I'd be happy for my solicitor to hold the money in escrow to pay the debts. I am indeed tied into a two year fixed rate mortgage but believe that the fee for selling during that period is only a grand or two so more than manageable. Out of interest, what does porting mean? Is that just a case of staying with the same lender?

Thank you all for the reassurance!

HARSA

curiousftb wrote: »

Hello again all

Thank you for the advice, I'd be happy for my solicitor to hold the money in escrow to pay the debts. I am indeed tied into a two year fixed rate mortgage but believe that the fee for selling during that period is only a grand or two so more than manageable. Out of interest, what does porting mean? Is that just a case of staying with the same lender?

Thank you all for the reassurance!

yes. so no early repayment charge and you most likely stay on the same rate

bigmatt1174

You port the original amount and the T&C's on that amount stay - so for example if you are 6 months into a 2 year fixed rate deal you have 18 months left and you have borrowed £50k then on the new property you have £50k fixed for 18 months and the remainder is on a rate that is available today so in your case you are looking at approx £216k so if you have £50k on a fixed rate you then port this to the new property and borrow the remaining £166k on a rate that is available today. That rate can be a tracker, fixed, discount or what ever they have to offer!

holly_hobby

Please be aware that you port the mortgage rate only - NOT the borrowing itself.

Porting is at the complete discretion of the lender, and you will be subject to full credit and status checks on the TOTAL amount of borrowing - regardless of how much of that will be charged at the ported rated over its remaining term (with the residual amount of borrowings placed on a product chosen from their current portfolio - as noted above).

If affordability is tight with the current debts, the lender will make it a condition of the mge offer that the noted debts are repaid upon completion (be that directing the solicitor to ensure and action this, or giving you a time frame to administer this yourself).

Hope this helps

Holly