Mortgage Advice

spendaholic1986

Hello

Just looking for a little guidance/advice.

Currently paying off debt in the hope of applying for a mortgage next year but was wondering whether if we applied earlier my high level of personal debt would scare off lenders (£13,000)?

Currently:

Loan payments: £331 pcm (dropping to £112 in August next year)
Credit card balance: £4500
Salary: 21500

Partner:
Credit card balance: £1700
Salary: 18500
Ongoing fixed term contract (currently being renewed every 6 months)

Both credit files are clean apart from 1 late payment on my part in 2011 (some defaults on my credit file from 2009 have now expired).

The original plan was to wait until next year when the credit card balances were lower and my loan payment had dropped to £112 per month making my affordability better but we are under pressure from family to buy sooner.

I should have mentioned earlier, we have a £20,000 deposit gifted by my partners family and are looking at properties between 130,000-160,000.

Any advice would be appreciated

lee111s

Have you put the figures into any online calculators to see what they come up with?

Westminster

Try a couple of the mortgage calculators on lender websites to see how they judge your situation on affordability with your current loan payments / credit card balances.

csgohan4

your unlikely to get a mortgage with that much debt I'm afraid. Get your debt paid off and consider some help to buy schemes if your struggling.

Dird

Why not use the £20k to clear the credit cards & loan off & then save on top of what's left? Aren't the credit card fees really high yet?

Also, does anybody know if student loans are treated the same as other debt for mortgage apps?

spendaholic1986

Thanks for your responses!
As the 20k is from my partners family I wouldn't feel comfortable using it to pay off my debt.

Fortunately I have managed to secure 0% interest deals for my credit cards and should be able to pay them or during the interest free period.

I'll have a look at some affordability calculators but I think the most sensible option is probably to wait until I have reduced the card balances and the loan paymen had dropped before going any further.

Thanks again.

csgohan4

They generally don't treat student loans as debt but rather factor it in your affordability. It is deducted from paye anyways.

kingstreet

Assuming no kids, childcare, season ticket cost, ground rent & service charges, a 25 year term etc you can borrow just over £140k on one high street lender's affordability calculator.

If you don't feel confident doing this yourself, get an independent broker to do it for you.

spendaholic1986

Thanks Kingstreet. I found something similar myself.

I will probably approach a broker...I've always been a little afraid of banks!

Thanks again all!