How would this work?

emsikins

We're looking at moving house and the mortgage advisor we spoke to suggested, when we sell our flat, using some of the money to pay off our credit card debt. As a result we'd likely be lent more for the mortgage.

Made sense to us until we thought about it and we thought, when your move house you sell and then buy more or less straight away. How would we have the cash to pay off the cards before getting a new mortgage as surely once a buyer has paid us they'd expect to have the keys? Can anyone help? If it is doable we're keen as it would really help us out by clearing a big chunk of our debt!

quantic

I think he is just suggesting that you keep some of the equity from your sale and put down less deposit on the next house. The timescales don't really matter.

Say you sold for 100k and owe 60k this leaves you with 40k and the next house was 110k, you could just put down 11k deposit and keep the other 29k for debt etc...

Not suggesting you do this but its possible to do so.

[Deleted User]

In effect, you would be turning an unsecured debt into a secured debt, and extending it to the life of the mortgage.

emsikins

When he looked into it though it seemed we couldn't get enough on the mortgage with the debt but with them paid off we could get a better deal. So do we essentially say we have less deposit and the remaining would pay the debt and then apply for the mortgage off the back of that? I think it's confused me as the advisor said they'd ask if we had any debts which we would initially.

House moving is confusing!

[Deleted User]

existing debts cant be taken out of the picture before the move(unless you have a money tree?)the only option is to pay a smaller deposit on the new house and use the balance you have left to pay off the debts
however if its a tight budget you may have to use all the profits from house a to buy house b
the question is how much debt do you have (ex mortgage),how much equity in existing house and price of the new house

Prothet_of_Doom

I'm not saying don't do this, but understand that you will be paying for whatever you paid for on credit cards over the next 25 years, so when you wear a dress that you bought on easy credit, remember that you'll have paid for it at (say) 5% a year over 25 years.

If this thought gives you a 'bad' feeling, use it to stop you building back up the credit debt again in future .

Note. We have a friend, who appeared to all and sundry that her and her husband were high earners and successful. But what they didn't tell anyone, was that over 5 years as thier house had doubled in value, they'd remortgaged to use the equity for fancy cars and holidays. The wife told me, when in the middle of the financial meltdown, we had just paid all our mortgage off, and her and her husband had £3000 mortgage a month, and his commission based job brought in no commission for 3 months. Her take home just covering the other bills.

emsikins

We are not, in my opinion, in serious debt. We make repayments each month comfortably etc but would just like to not have them! I think, we are thinking of perhaps taking the money out of our deposit on the next house if that's how we can do it and so put less down on the new place. We are fortunate that we were able to pay 50% deposit on our current flat and so the smaller deposit shouldn't impact the available mortgage too much, we are looking at buying for a similar price to what we paid.