Mortgage Deposit vs. Outstanding Debts

benham3160

Hello all,
Sorry if this is a tad confusing, brevity has never been one of my strong suits.

My wife and myself are looking to purchase our first property (we currently rent) due to some previous credit problems with myself (a propensity as a student to take out cards/mobile phone contracts and forget to pay them!) we had to rent when we first moved in together, we've been renting a property with no issues at £700pcm for three years. My final "black mark" falls off my credit file in six weeks, a default (settled five years ago) for a £41 mobile phone bill.

We have a deposit ready to go of £13,000 and would be looking at houses around the £150k mark (which is as pretty much as low as they get around our area) by my reckoning that's an LTV of 91%. We have a combined gross income of £51k, we've saved a fair chunk of our deposit outselves (can be evidenced though saving £600 a month in to the joint savings account.)

Now here's the rub;

My wife-
Unsecured high street bank loan for purchase of car - £5k outstanding
Credit cards: £2.7k

Myself:
Credit cards: £2k

This seems to be a stumbling block, my question is simple are we better off using a chunk of the £13k to pay off a fair bit of our outstanding debt (which is being well managed, and we've overpaid all of it for a year or two) or do we blow on and continue as we are? The reason I ask as that a quick check on a few calculators online shows that'd we be offered a big fat £0 at the moment for a mortgage.

Somebody close to us can "take on" £3k worth of card debt for us, but I don't want to go down this route if it's unlawful or going to look suspicious.

Any suggestions welcome.

Cheers,
Andy

kingstreet

It's impossible to answer this accurately.

If you enter your details into your chosen lender's affordability calculator, then slowly remove credit items, you'll see the impact it will have on what you can borrow.

An independent mortgage broker would do this for you too, choosing the best lender for you and your circumstances.

benham3160

kingstreet wrote: »

It's impossible to answer this accurately.

If you enter your details into your chosen lender's affordability calculator, then slowly remove credit items, you'll see the impact it will have on what you can borrow.

An independent mortgage broker would do this for you too, choosing the best lender for you and your circumstances.

Hi Kingstreet, thank you for that, I thought that may well be the case.

Would you, (I know this is a finger-in-the-air response) given this default satisifed in 2009 for £41 that remains on my credit file until the end of February wait until this has "fallen off" or just go with it anyway?

We're really itching to start the ball rolling as our rental contract completes in July and we're not looking to have to renew again.

Cheers for your help!

kingstreet

There are lenders who ignore minor adverse once it is three years past it's original date of registration, so I would start speaking to someone now to see what can be done and when.