First-time buyer with unsecured debt...

Monkey2513

Hi all,

Apologies if a similar topic has been covered before.

Following our wedding we currently owe £11500 (£9500 credit cards and £2000 overdraft).

We also have £7000 savings

Although possibly more costly in the long term, we are looking to buy our first property as soon as is realistically possible but am unsure of how different lenders will view our situation.

Option 1 we are exploring is consolidating the debt into an unsecured loan at £175 per month allowing us to save £1400 per month for a deposit and will have at least a 10% deposit within 6 months.

My concern is what kind of view would the average lender have of this? Would this effectively be seen as borrowing the deposit? Or would it be OK as long as there was evidence the loan and potential mortgage payments were affordable?

Option 2 - make some significant payments off the cards over the next couple of months and reduce the limits.

Any thoughts welcome! I realise clearing the entire debt first may be preferable, however we are looking for the quickest route out so need to know whether the above are at least viable.

Thanks in advance for any suggestions

Monkey2513

chanz4

I think a lender may see you as a high risk with so much card debt, pay this down first

Dave_Ham

It will depend upon the lender, there are some where this would be allowable depending upon the details.

Many people have car finance and a mortgage and depending upon salary, £175 is not excessive.

Good luck

Annisele

The lenders will care about affordability.

If you're earning £200k a year and want to borrow £100k, they (probably) won't care about £175 a month of unsecured loann.

If you're earning £20k a year and want to borrow £100k, you're pushing affordability anyway and £175 a month of unsecured loan will likely be too much.

As Dave Ham says, devil is in the detail.

Monkey2513

Annisele wrote: »

The lenders will care about affordability.

If you're earning £200k a year and want to borrow £100k, they (probably) won't care about £175 a month of unsecured loann.

If you're earning £20k a year and want to borrow £100k, you're pushing affordability anyway and £175 a month of unsecured loan will likely be too much.

As Dave Ham says, devil is in the detail.

Thanks for all your replies.
We earn a combined income of £41,000. We are hoping to get a mortgagee for £120,000.
If we paid off the c.cards within the next 10 months we could reduce the balances to £5,000.

We are aware even with this remaining balance on c.cards and overdraft isn't going to look good to a mortgage, hence the reason for wanting a loan.

Are question really is what's the best option for us moving forward?

Thanks for your responses

Thrugelmir

Monkey2513 wrote: »

Would this effectively be seen as borrowing the deposit?

In principle yes.

Your spending habits (credit levels) tell a lender a lot about you and the level of you risk you pose as a potential borrower, i.e. your attitude to money.

amnblog

With a good credit history I cannot see this being an issue. (Subject to you having the deposit you need).