Debt prior to FTB Mortgage - please help?

lottyw4

Hello,

Please can someone advise me of the best thing to do in relation to my debt prior to a mortgage application? And if its likely we will be approved?

Debt:
Credit card balance of £4700
Overdraft of £1000
Unsecured loan of approx. £3500 with 2 years left to completion
(Total Debt £9200)

I currently pay £250 off my credit cards and £202 of my loan each month (Total £457)

I am applying for a mortgage with my husband at the end of the year, I would like to have waited to clear my debt but due to circumstance we need to purchase a house asap.

I am considering extending my loan – if I borrow £10k I will consolidate all my debts and the repayment over 5 years is £237 a month.

Even though I am committing to paying the loan for an extra three years I will have no credit card debt to pay off, be out of my overdraft and have an extra £220 each month to put towards something else.

Is it worth me applying for the loan? Will it look better to lenders?
Will it look bad having a search done within 3 – 6months before applying for a mortgage?
Am I best to stay as I am with regards to paying back my debts?
I have two other credit cards with limits of £1750 (cap1) and £1500 (Vanquis) which have minimal balances (below £20) – shall I clear these and close them or leave them open with no balance?

I know this is quite a lot of debt to have when applying for a loan but some things that might be worth considering:
1. My husband has NO debt at all
2. We have no phone contracts – both on Pay as you go
3. No store finance or hire purchase
4. Neither of us drive so no car finance or expenses relating to running a car (we live near work so walk!)
5. We have no children, dependants or pets
6. My salary is £22500 and my husbands is £32500
7. We have a 5% deposit of £8500 to put towards a house purchase of £167000.
8. We are first time buyers
9. We have look at our credit score and mine is Good (850) and my husbands is fair (740)
I am in full time work - had my current job for 4 years.
Husband is a contractor via giant at Building Society. Been there for 12 months and will have 6 months left on contract when we apply.

Sorry for overload but your help is much appreciated!

ACG

The mortgage is based on affordability.

So if you can afford to support the mortgage plus the debts (in the eyes of the lender) as they stand or the new lower payments - it should be fine.

If you are going via a broker, get them to check.
If you are doing it yourself get on the lenders websites.

Its a bit difficult to answer with any guarantees as its so far away but it should give an idea.

1 credit search 3-6 months in advance should not be the end of the world.

Wh05apk

Affordability probably won't be an issue, possibly more problematic will be that your husband is on a contract, definitely one to speak to a broker about.

lottyw4

Thank you for your replies, do you think its too soon to approach a mortgage broker as haven't got the full deposit yet? And not looking to apply until October at the earliest. Or is it worth getting the advice now?

-taff

If you get a consolidation loan you will be paying back over 14,000 pounds for your 9k debt.

Snowball them instead. http://www.whatsthecost.com/snowball.aspx

or start shifting the debts to 0% cards if possible.