Mortgages and Debt

diw2015

Hi all,

Hope this is in the right forum. Looking for some advice although I'm 99% sure I know the answer!

This is my situation:

Bought a flat 6 years ago taking out a mortgage only in my name. Had very little debt back then, maybe a few hundred on a credit card.

Since then, I have married and myself and my wife live in the flat together. the mortgage is still only in my name.

Over the last 6 years, and without getting into much detail we have built up a lot of debt on credit cards (over 20k). I know how irresponsible this is and really we had no idea how quickly it creeps up with a 'little bit here and there' on the credit card. We have came to terms with this in the last 6 months and are doing absolutely everything to pay this off in the next 2 years.

We have consolidated a good percentage of it in a fairly low interest loan from my bank and any other disposable income is going to paying off cards. We are doing all we can to be debt free as soon as possible.

We both work in pretty decent paying and secure jobs and we have never missed a payment on any cards etc.

My question is, if we still had, say for example, 5k of debt on cards/loan in 2 years time and we wanted to move to a slightly bigger house...would this affect us getting a mortgage and the rate we would get?

I realise the importance of LTV and how much we could sell the flat for in relation to how much I bought it for/have paid off already.

Are mortgage providers reluctant to offer mortgages, even if I have already got a mortgage (although it is with NRAM and are keen to get rid) to people with debt? Even if they are actively reducing it?

We wouldn't be looking to do anything for 2 years anyway although in an ideal world we would be using these next 2 years to build up a deposit, not pay off debts.

And yes, we have cut the cards up

Thanks in advance

Foxy-Stoat_3

Your debt in 2 years time will only affect your affordability.

Depending on the numbers, no reason why you cannot get a bigger mortgage.

diw2015

Affordability as in how much we can afford to pay towards a mortgage each month?

I'm hoping that won't be a problem, especially considering we won't be breaking the bank with our next property. A modest upgrade I'd imagine.

Is this even the case I am looking to change mortgage provider?Would my current debt affect my situation if I wanted to transfer to a different mortgage provider for a fixed rate for 2 years? Would it affect the rate I would be offered?

Northern Rock are waiving all fees to get rid of customers

Foxy-Stoat_3

diw2015 wrote: »

Affordability as in how much we can afford to pay towards a mortgage each month?

I'm hoping that won't be a problem, especially considering we won't be breaking the bank with our next property. A modest upgrade I'd imagine.

Is this even the case I am looking to change mortgage provider?Would my current debt affect my situation if I wanted to transfer to a different mortgage provider for a fixed rate for 2 years? Would it affect the rate I would be offered?

Northern Rock are waiving all fees to get rid of customers

Affordability as in how much the LENDER thinks you can afford to pay back.

If you want to remortgage now with a new lender your finances will be accessed in the same way they would in 2 years time.

You are allowed to have debt when you want to remortgage, again, depending on the numbers this may well be achievable now.

diw2015

My worry would be that my wife has never had a mortgage before and, say in 2 years time, we go to get a joint mortgage we would be knocked back due to the debt.

If I was looking for another deal at the moment, it would purely still be in my name for the 2 years.

I take it ltv is more important than debt when being assessed for lending?

Don't get me wrong we are tight for cash just now but that is because we are trying to pay off a lot of debt every month. Probably around 1000-1250

Foxy-Stoat_3

diw2015 wrote: »

My worry would be that my wife has never had a mortgage before and, say in 2 years time, we go to get a joint mortgage we would be knocked back due to the debt.

If I was looking for another deal at the moment, it would purely still be in my name for the 2 years.

I take it ltv is more important than debt when being assessed for lending?

Its all important, why would it be better if its just in your name, she would need to be on the mortgage anyway and you couldn't say she wasn't living there.

Speak to a local Broker for options in your current situation, go with copies of all your credit reports (don't waste money on credit scores) and see what they say.

diw2015

Wouldn't necessarily be better just thought it would be the more practical option?

Ideally I would be looking to save some money on my mortgage for next 2 years so that we could get debt free quicker.

I pay about 420 a month on a 84000 mortgage at the moment, in my albeit not very valued opinion, that's not great

Edit: mortgage over 35 years at moment

Foxy-Stoat_3

Having a second salary would help your debt/salary ratio and the amount you can borrow.

Doesn't sound too bad, I pay £505 on £101,000 mortgage - 22 years left....actually if yours is over 35 years, yes its not that great.

If you manage to get a better rate, you may save £40-£70 a month...if your dropping over £1000 a month into your debts then I would just continue with what you are doing and re-mortgage when your are in a stronger financial position.

diw2015

Yeah that's what I suspected although I am going to speak to a mortgage adviser to get a clearer picture of my options.

Thank you the replies so far