First Time Buyer Mortage Application Advice

fiftypence

Hi All,

I'm going to come into some money (25k). I have a credit card (10k) and a loan (10k remaining settlement) with no other savings. I want to get on the property ladder but realise I need to do something about my debt.

I want to use 10k to pay of debt and keep the remaining 15k for a deposit on a house. I'm paying £400 a month towards the loan £200 a month towards the credit card.

I've done my sum's and I am content that I could pay of £400 a month towards debt once I have a mortgage.

The question is which debt to I pay of, the loan or the credit card? I read somewhere that mortgage providers use the monthly repayment to reduce the amount they loan. If this is true, I would want to pay off the loanso that I get a higher mortgage.


Point to Note:

I do not want to pay of all the debt and save again for a mortgage as I know I can manage a mortgage and short term debt.
I'm not intrested in paying of the debt which will save me most money. I'm only intrested in paying of the debt that will offer me a bigger mortgage.
I know I can afford repayment for greater mortgage I'm seeking.

Foxy-Stoat_3

fiftypence wrote: »

The question is which debt to I pay of, the loan or the credit card? I read somewhere that mortgage providers use the monthly repayment to reduce the amount they loan. If this is true, I would want to pay off the loanso that I get a higher mortgage.

If what you have read is correct, then pay off the debt with the highest monthly payment.

fiftypence

Can anyone confirm if it is true, that mortgage providers use monthly debt payments to reduce size of mortgage? i.e. take away the annualised amount from income before applying the multiplier.

Keekles

Without knowing their exact formulas and such, the simple answer is yes. All consistent outgoings, including credit card debt / loans, will heavily influence the amount a lender is prepared to offer on a mortgage basis.