mortgage application with unsecured debt?

midlander81

Hi


Is it possible to apply for a mortgage if you have some unsecured debt? We have good credit and there are no issues with out ability to repay etc.


How would this affect us? Our current debt level is quite high at around 40K but we are looking to move in a couple of years when it's likely we will owe between 10-15K

ethank

You really have not provided enough information.

What are your earnings? What is your budget etc. Do you have any savings?

midlander81

Hi Ethank,


Sorry for being vague


We earn 68k between us. We will be looking to buy a house in the region of 230K and we have a deposit of around 60K made up from equity from out current home.

amnblog

No-one can accurately say how the market will work in two years.

midlander81

Hi Amnblog


I know that it's difficult to predict what will happen. I was just trying to get a general idea of whether or not it's possible to get a mortgage when you have some credit card debt etc.

kingstreet

Why not try your likely lender's online affordability calculator and get an estimate?

Lenders typically take 5% of card debt as the monthly payment and that reduces your maximum mortgage accordingly.

Thrugelmir

midlander81 wrote: »

We have good credit and there are no issues with out ability to repay etc.

Until misfortune strikes. With that level of debt the concern for lenders is uncertainty. Being dependent on every monthly pay cheque means that your credit is nowhere as good as you think.

TLM_77

Pay off your debt first if you can, I did, much better way of doing things.
However, you could also apply for a mortgage but inform the lender to put your debt down as being paid off on completion of a house move, i.e. the equity in your current property pays off your debt - that would only leave you with 20k deposit but you would be debt free - which is obviously much healthier.
Some lenders may lend you a mortgage on condition the debt is paid off BEFORE the mortgage is offered, many won't.

Bottom line, get that debt paid off, you earn 68k between you and I bet your debt outgoings a month are not far off 1k a month - try to pay 1.5k or even 2k a month off the debt first.

[Deleted User]

I'm sure you have got sorted by now, but just in case anyone else is reading: Some lenders now use a 50% unsecured debt to salary ratio (e.g. Woolwich, Post Office), whereas others base it on affordability alone (Bank of Ireland, Halifax). Best to talk to your broker or lender directly to find out.

kingstreet

[quote=[Deleted User];68721734]I'm sure you have got sorted by now, but just in case anyone else is reading: Some lenders now use a 50% unsecured debt to salary ratio (e.g. Woolwich, Post Office), whereas others base it on affordability alone (Bank of Ireland, Halifax). Best to talk to your broker or lender directly to find out.[/QUOTE]
So PO do it one way and BoI do it another, despite them being one and the same?

You may be right, BTW. I'm just curious, not being clever.