Move house with Debt

kayla3600

Good Afternoon,
I wonder if anyone can offer me some advice. I had 15k worth of debt which I have now reduced to 10k by paying them off with all the spare cash I have left at the end of the month.
We are looking to move next month and after using various mortgage calculators we would be looking to borrow around 20k less then what they are offering.
Now when it comes to applying for the mortgage is it worth me continuing to pay the debt off as I am (using all spare funds) or paying maybe half and letting my bank account balance build a bit to show we wouldnt struggle making repayments?

Any advice would be greatly appreciated.
I know the best way would be to pay off all debts before moving, but we want to move this year and as the calculators say that we can borrow more then what we are looking for, it doesnt seem to ambitious.

Thanks

Thrugelmir

£10k of debt is potentially not an insignificant sum in terms of your overall financial position. Lenders are a little more sophisticated in how they profile you as a potential borrower than simply the amount of cash you have in the bank. So not just in terms of the mortgage but for your own benefit too. Paying down debt should be your own priority. When push comes to shove lenders will offer to the better risk profile applicants first.

kayla3600

Thanks Thrugelmir, but I think I'm having a bit of a brain fart moment. So is it Ok to carry on as I am? I understand that lenders look into things a bit more deeply, and I guess they can see via credit reports (never missed a payment, and paying more then the minimum) and bank statements where my money is going. I'm not just spending it willy nilly.

Thanks again!

Red-Squirrel_2

Can you clear the debt, or some of it, with the proceeds of the sale?

kayla3600

Hi Red-Squirrel
If we can find the right house at the right price then yea I would look at doing that. But as my debt is all at 0% I would rather reduce the amount of the mortgage we would require

kayla3600

Also that amount could alter which LTV we fall into, which could help with regards to a better interest rate

audigex

Pay every penny you can into the loans, other than your basic savings - the smaller the loan is compared to your income, mortgage and house price, the better.

As long as you have savings to cover emergencies, and are living otherwise within your means, bank balances are unlikely to mean much: and raise the question of why you're not paying off the loan with them.

You may not get a reduced interest rate on the mortgage, but you can likely move the smaller loan to a lower rate, so it should work out pretty much the same overall.