Is it possible to use a mortgage to clear debt.

matthewcallaghan

I have been trying to rid myself of debt that i have accumulated over the years, the majority of which is a hang over from my times at university, and i seem to be struggling.

I should be debt free in 2-3 years at the current rate.

However, i am nearing my 28th birthday and would love to be able to move into my own home, but as we know the housing market is a very tough one at the moment.

I am currently paying out around 700 to 800 a month on my debt, which means that i would be able to afford a mortgage and bills, however, with my debt i am unable to get a mortgage. Or at least i was after my last meeting with an Independant Mortgage Adviser.

My question therefore is this.

Theoretically, if you have a property in mind, lets say at 80,000 and you have outstanding debt of 15,000 is it possible to somehow get a mortgage for 95,000 and therefore clear your debt, leaving you able to pay off the mortgage and monthly bills.

I have mentioned this to people in the past and some say you can, others have no idea, and some say no.

Hopefully aomeone on here will be able to give me some advice.

Yours thankfully

Matthew

Doozergirl

AFAIK, the marketplace has pretty much dried up for 100%+ mortgages.

Secured loans are far more risky than unsecured ones and you are immediately putting yourself into negative equity meaning you are stuck in that house until you can work your way out of that extra debt. Adding debt to your mortgage doesn't make you free of debt, unfortunately Why not work on your debt and see where you get to in a couple of years time. Owning a house (especially one you are stuck in) doesn't make you happy, you know. Being debt free might!

If you are brave enought to post your state of affairs on the Debt Free Wannabe board, people will help you to save money on virtually all your outgoing. The whole purpose of the site is (surprise!) to save money, so you can come and join the community, learn to be a MoneySaver and become Debt Free, and in turn, a Homeowner, sooner than you thought!

Doozergirl

Debt Free Wannabe

http://forums.moneysavingexpert.com/forumdisplay.html?f=76

BTman

What a strange topic title.
I always thought a mortgage was a debt...

Vampgirl

A few months ago I was thinking of doing this through a Northern Rock Together Mortgage which is a 95% mortgage plus up to £30k unsecured loan at the same rate as the mortgage. But in the end I decided that it was just too risky at the moment due to interest rate and house price uncertainty - I also feel that if banks are withdrawing 100% mortgages then they don't think the future is too rosy either. I have no financial qualifications BTW - this is just my own opinion, so feel free to disagree with me!

In theory we would have been able to afford the repayments and they do do fixed rates, but with no-one really knowing whats going to happen over the next couple of years I thought that borrowing 125% just wasn't sensible. So we are now paying off our debts and in a couple of years will have a nice substantial deposit. Its frustrating coz I'm an impatient person, but I'm happy that we're doing the right thing for us.

BettiePage

BTman wrote: »

What a strange topic title.
I always thought a mortgage was a debt...

My thoughts exactly!

wecanhelpu

Is it possible to use a mortgage to clear debt?
No. Mortgage is debt

Is it possible to clear a debt before getting a mortgage?
Yes. And that's what you should be doing.

Have a look at this article on 100%+ mortgages


http://money.uk.msn.com/Mortgages/firsttimebuyer/article.aspx?cp-documentid=5314635

frivolous_fay

matthewcallaghan wrote: »

I have been trying to rid myself of debt that i have accumulated over the years, the majority of which is a hang over from my times at university, and i seem to be struggling.

Make sure that you're not paying off anything you don't need to be; prioritise your debts!

For example... I'm 30 and I have a student loan, but I don't earn enough to have to start paying it off. I don't like it hanging around my neck, but the interest is so low that there's no point throwing £100 a month at it; I'd rather pay it off in one go when I have the opportunity. Now that I'm about to take on a mortgage, that £100 can certainly be better spent elsewhere.

My loan didn't affect my assessment for the mortgage - but be sure to deal with any overdrafts, credit cards or unsustainable debt before you think about taking one on. (This is my opinion)

Don't be a martyr; pay off the big ones first.

Snow_Dog

Why would you want to turn a debt that you are going to clear in 2-3 years time into a debt that will take you 25 years to clear and cost you probably 3 or 4 times as much?

Clear the debt first is what I would do while you can.