Post updated! Advice on arranging finances before mortgage application

Fleeb

Hi, I'm planning on applying for a mortgage in the near future, before I do I'd like to organise my finances in such a way as to minimise the chances of being rejected.

Firstly I have some old student loans (£4800ish in total) that are currently deferred, I could use some of my deposit to pay them off. In terms of a mortgage application is it better to be completely debt free with enough deposit to get an 80% ltv mortgage, or have enough deposit for a 75% ltv but have some deferred student loan debt?

Secondly; in addition to being employed full time I'm also classed as a small trader. I used to do some ebay trading but only make a very occasional sale now. I do still have to fill out a Tax self-assessment each year though. I could stop selling completely and close the business without too much hassle if it would make my application more likely to succeed. Is being classed as self-employed as well as in full time employment likely to help, hinder or have no effect on my chances of being approved for a mortgage?

Many thanks for your thoughts on these points.

Fleeb

Okay, it seems I asked a number of my questions in the wrong place, I've rewritten my original post to make it more relevant to this section of the board. I hope somebody will be able to weigh in now.

Thrugelmir

If you are employed full time that I would exclude any secondary income. Unless its material to your application.

Let_Us_See

Most lenders will ignore such a low student loan and a 75% LTV should provide more competive rates. Agree that you should ignore low self-employed income unless required for affordability.

nexus7

I would suggest you don't worry about the student loan, and use it for a larger deposit. The rate difference between 75 and 80% LTV will serve you better in the long run, and as they say a student loan is usually the cheapest loan you'll ever get, so in terms of priority it's generally last.

For example your hypothetical mortgage rate is 4%, and student loan is something like 1.5% currently. Why would you use savings to "overpay" the student loan when the same money can either be used to "overpay" off your mortgage or more likely use it as a rainy day fund easily earning more than 1.5% in an instant access cash ISA etc. and you pocket the difference.

On another note, lenders don't seem to worry about it too much even for affordability calculations compared to say credit card debt or other personal/unsecured loans or even an overdraft.

Fleeb

Thanks to all of you for your comments. It's a relief to know that the SL isn't likely to be factored into the calculations, I was quite worried it would limit the amount I could borrow.