Considering moving house, but not sure what we might be able to borrow

henrik1971

Hi there, I wonder if anyone with experience in this arena can help:

We are wanting to move house and buy something around £170-180k.
We will have a 15-20% deposit (about 27-28k), so looking to borrow about £145-150k
We have 2 children and would apply jointly with our two incomes of £38k and £12k. We have a very good credit history to date, no skeletons.

The downside is we have about £14k in credit card balances all on low fixed for life or zero % deals.

Does this sound possible, and if so, which lenders would be the best for us to approach? What sort of interest rates might we be looking at?
We have had our current mortgage with Halifax for 9 years and are on the SVR.
Thanks!

Thrugelmir

Your level of debt will be a major issue. Might be interest free at the moment. However you've still got to repay the debt.

henrik1971

I appreciate what you're saying and am trying to reduce it as fast as possible.
You say the debt will be a major issue, but does that mean it may not be a complete dealbreaker? I guessed any application we make will be marginal, hence my original post, wondering which specific lenders (if any) might be prepared to look at us.

We could consider clearing the debt from the equity we have at the point when we sell the current house, renting for 6 months scraping together some more savings and then going back to and applying with a 10-15% deposit instead. Would this be better?

What is least worst in the eyes of mortgage lenders in these type of cases: applicants with more unsecured debt, but a higher deposit, or applicants with little or no unsecured debt, but a lower deposit?

Thrugelmir

henrik1971 wrote: »

What is least worst in the eyes of mortgage lenders in these type of cases: applicants with more unsecured debt, but a higher deposit, or applicants with little or no unsecured debt, but a lower deposit?

Merely from a debt point of view alone, as many factors combine together when scoring an application. The concern for the lender is the high level of debt. From your credit history over the past 6 years. Credit usage can be tracked and scored. This will give the lender an insight into how you manage your money. What lenders want is borrowers that manage there money responsibly.

Continual high debt usage is an indication to a lender that a borrower spends today and worries about paying back tomorrow. All is fine until a financial crisis hits, i.e. redundancy. Then the borrower finds they've no emergency savings to fall back on. From there the borrowers financial situation is a slippery slope downwards. Ending up in a DMP or worse bankruptcy.

GMS

The credit cards will be taken as a credit commitment and the lender will not take as 0%. Typically they will take 3% per month as a commitment so £420 in your case.

Try some lender affordability calculators to see what figures come out. Not totally accurate but would give you an indication.

Alternatively speak to a broker and see which lenders may be possible.

Dave_Ham

Hi,

Cannot comment if the new mortgage would truly be affordable and what your strategy would be to reduce this unsecured debt although you will be able to achieve the mortgage given the information provided.

Chances are you will be able to achieve it at lower than the 3.99% you are currently paying and depending upon ages you could consider increasing your term to give you some additional funds to start chipping down on the unsecured credit cards.

Get some formal advice and they should be able to break down the numbers with more certainty.

All the best