mortgage advice please - mortgage with unsecured debts.

TrickyDicky101

MJP43 wrote: »

Do lenders base it on debt vs income ratio?

E.g Is someone with 15 unsecured on 35k income scored lower than say someone with 25k on 90 income?

Yes of course - in the same way that someone with a larger income will be able to borrow more.

leveller2911

garycarter79 wrote: »

Thanks ACG
It's interesting to hear it from a mortgage advisers perspective as I think that there is a misconception that everyone is up to their eyes in debt whereas you obviously see the real picture.

I'm not sure there is a misconception that everyone is up to their eyes in debt. Since 2007 its true that many people paid down their debt however since the economy has pulled round personal debt has increased. I don't believe someone with a combined income of £75k,unsecured debt of £25k and no a single penny saved for a deposit is in any way "usual".

If you were lending your money to your neighbour and looked at the above would you be confident that you would get your money back?.

http://www.thisismoney.co.uk/money/news/article-2724894/Families-red-pose-threat-UK-recovery-household-debt-quadruples-1990.html

I'm sure there are solutions for you but you need to remember that anyone seeling you a mortgage is a salesman/woman , they get paid for selling you a product. Its down to you to make the decision if its in your best interest to take on a mortgage with that amount of unsecured debt.Are you in secure jobs ? as far as they can be these days.

About 2 years ago there was a young chap on here in a similar position, he was earning great money , wanted to set up home with his GF .He is now posting in the debt free section and in serious financial trouble through unsecured debt.

garycarter79

Hi Leveller, thanks for posting. I have made a few comments below.

leveller2911 wrote: »

I'm not sure there is a misconception that everyone is up to their eyes in debt. Since 2007 its true that many people paid down their debt however since the economy has pulled round personal debt has increased. I don't believe someone with a combined income of £75k,unsecured debt of £25k and no a single penny saved for a deposit is in any way "usual". Of course I can't speak for the general population however based on my own circle of friends and family, having some unsecured debt is not at all unusual. I agree that 25K seems high but I know lots of couples with cars on finance, credit cards or home improvement loans that easily owe this amount or more without it necessarily being an issue. The reason we have no deposit saved is because we have been focussing on getting rid of the debts (having paid back more than 20K in a few years. Surely it makes sense for us to pay back the debts before saving??

If you were lending your money to your neighbour and looked at the above would you be confident that you would get your money back?. We have paid back over 20K in a relatively short time with no late payments or blemishes on our credit report. Surely this would give a lender confidence that we WILL repay. Surely someone who had no credit history would be more of a risk as there is no evidence that they will be good payers. I think that we have more than proved our ability to repay our debts.


I'm sure there are solutions for you but you need to remember that anyone seeling you a mortgage is a salesman/woman , they get paid for selling you a product. Its down to you to make the decision if its in your best interest to take on a mortgage with that amount of unsecured debt.Are you in secure jobs ? as far as they can be these days. We have both worked for our companies for 10 years plus. Our mortgage payment would be similar to the amount of rent that we are paying so it shouldn't impact on our debts or our ability to repay them in any way.

About 2 years ago there was a young chap on here in a similar position, he was earning great money , wanted to set up home with his GF .He is now posting in the debt free section and in serious financial trouble through unsecured debt. We are committed to getting rid of our debts however I can't say that we feel like we in serious financial trouble as we can afford the repayments. We are not looking to take on a huge mortgage, just something that is in line with the amount of rent we are currently paying.

garycarter79

MJP43 wrote: »

Do lenders base it on debt vs income ratio?

E.g Is someone with 15 unsecured on 35k income scored lower than say someone with 25k on 90 income?

Good question as I was wondering this too. Our debts are high but like you suggested, it is all relative to income. I can remember being around 3K in CC debt when I was a student and it was a real issue for me. I literally couldn't pay it back as my income was almost zero!! Our debts are a real burden but more on an emotional level as I hate being in so much debt. We are able to make the payments though so I know that there will be an end to it!!!

michelle2008

As someone of a similar age - this is quite a lot of unsecured debt. Although congratulation on paying so much off - you must have had quite an adventure at some point!

Have you plugged your stats into an affordability calculator? I assume your monthly repayments will be quite steep if it's unsecured? You seem to be planning on quite a low interest rate (around 2-3%?). Could you get a fix at this low a rate with your debt and LTV?

I agree it is frustrating renting and it is a great feeling owning your own home. But the first year or so is really expensive - just make sure you have a cushion and can still keep on-top of your debt.

Good luck!

garycarter79

michelle2008 wrote: »

As someone of a similar age - this is quite a lot of unsecured debt. Although congratulation on paying so much off - you must have had quite an adventure at some point!

Have you plugged your stats into an affordability calculator? I assume your monthly repayments will be quite steep if it's unsecured? You seem to be planning on quite a low interest rate (around 2-3%?). Could you get a fix at this low a rate with your debt and LTV?

I agree it is frustrating renting and it is a great feeling owning your own home. But the first year or so is really expensive - just make sure you have a cushion and can still keep on-top of your debt.

Good luck!

Hi Michelle,


I am afraid that we haven't had an adventure, just a series of 'setbacks' failed (previous) relationships, disorganisation and thoughtless spending!! Thankfully we are well on top of things now and the debts should be cleared within 3 years.


Yes, we have had some basic affordability calculations done and our debts certainly do reduce the amount that we can borrow however it appears that we are still able to obtain the £180K that we need.


We have also had some basic quotes done based on fixed deals and they tend to come out at around the £800 mark. I know that this could change when we actually apply but we are not willing to go over £800 per month so if this is the case we will simply look for a cheaper property.


Fortunately we have all the furniture etc that we need as we have lived together in rented accommodation for quite a few years so we shouldn't need to buy a great deal. My wife has a small amount of money in an ISA that we keeping for legal costs etc plus we will be getting our deposit back from the landlord so that will help!!


Thanks again for posting

garycarter79

Spent a couple of hours today plugging figures into the affordability calculators for loads of high street lenders. All of the online calculators include a section for unsecured debts/CC's etc so this gives me hope that it's possible.


Most of the calculations offered us at least the £180K we need for our mortgage.


I also ran a calculation without factoring in the unsecured debts and the amount we could borrow is astonishing!!! Makes me realise just what an impact these debts have on our mortgage borrowability ( I made that word up)

kingstreet

Yep. A £10k card balance cuts the max borrowing from £120k to £59k for someone on £24k a year, over 25 years.

Typically, a lender takes 5% of the card balance as the monthly payment regardless of the interest rate, so that's effectively "taxing" the applicant by £500 per month.

ACG

The other thing to check if not going through a broker is whether they will do debt consolidation up to 90%. Some lenders have caps in place between 75-85%.

garycarter79

ACG wrote: »

The other thing to check if not going through a broker is whether they will do debt consolidation up to 90%. Some lenders have caps in place between 75-85%.

Hi ACG


We have haven't really thought about consolidating as most of the debt is on 0% or low interest and we are planning on having it repaid in less than 3 years.