How much of an issue would this be?

Timchips82

My brother is moving back to our home town very soon and want's to get on the property ladder. Him and his wife have a combined income of 70K and a deposit of around 15K.


They also have debts of around 20K. The debts are being managed and coming down. They have no late payments.


What effect will the 20K have when they apply for a mortgage??

bekkithedevil

My broker told me (on Monday) that the lender will take 3% of credit/store card debt as the minimum repayment each month/year regardless of how much you actually pay.

Any loans will just have the monthly repayment removed from gross salary to make "available" salary.

So in this case, assuming the £20k is all credit cards, the lender will remove £7.2k from the gross salary of £70k, leaving £62.8k as available salary for them to base their calculations on.

Hope that helps!

amnblog

Your broker was generalising.


It does not actually work like that since the Mortgage Market Review, although you might use it to give you a guide.

Timchips82

So lets say that they use that calculation meaning that he is paying £600 per month. That would reduce their overall income by £7200 per year. That would still leave them in a fairly strong position income wise.


I suppose the real issue is would the fact that they actually have a high level of unsecured debt be an issue in itself?