Mortgages and unsecured debt

[Deleted User]

Hi All,

I have an unsecured loan of £32,000 (£23,000 loan and the rest is interest, so this is the total owed) against a salary of £30,000. The loan was necessary at the time to help a family member. This costs c. £300 a month over the next eight years.

I have sale agreed on a property and met with a mortgage broker. I've checked my credit report and everything is fine/up-to-date and, even with this loan factored in, affordability tests are coming out in my favour. I also have an agreement in principle.

My question is - do you think this unsecured loan will prevent me from getting a mortgage? The mortgage broker doesn't seem to think so, but I spoke to the mortgage advisor at the post office who said they couldn't approve me on this basis.

Thank you

libf

Ask the family member to pay the loan back now?

ExpertAdvice

Every lender has a different criteira. If you have an AIP with another lender then you dont need to worry about what the adviser at the post office is saying as its their criteria.

Do you trust your broker?

TrickyDicky101

How much of the loan is outstanding currently?

£300pm for 8 years will not repay £32k even if the interest rate was zero.

[Deleted User]

First post on this, so I'm not sure how to reply properly!

ExpertAdvice - thanks for that. Yes I do trust my broker, I just got spooked after talking to the Post Office. She said it was 'new regulations', but perhaps something specific to the Post Office.

TrickyDicky101 - that's the total loan, plus interest, and I've rounded /down on payments and repayment period for ease of writing. It's covered. Thanks.

libf - no that's not an option, the loan is mine to repay and it's fine. Thanks.

daisyfrau

How much is left to pay on the loan? £300 a month seems quite a big debt outside of the mortgage payment - what monthly payment were you hoping to make on the mortgage? Any other big regular payments like childcare/credit card/car etc. any other debt?

daisyfrau

Plus: how big is your deposit, compared to your loan?

[Deleted User]

Hi daisyfrau, the mortgage payment is £400ish and no other big payments outside of the usual.My broker and I went through an affordability schedule and it worked out fine. I have a 10% deposit. The £300 loan payments are actually split with another family member as well, but it's against my name. I have no concerns about affordability, just how banks perceive this debt. I'm wondering if their focus will be on affordability or if the loan will be a red flag.

Thrugelmir

Consolidating the debt may well be the issue for the lender. Given the amount owing. Could your other family member not take a loan in their own name to reduce the amount owed.

[Deleted User]

Can I just check what you mean by 'consolidating the debt may be the issue'?

Thrugelmir wrote: »

Consolidating the debt may well be the issue for the lender. Given the amount owing. Could your other family member not take a loan in their own name to reduce the amount owed.

libf

[quote=[Deleted User];68695543]Hi daisyfrau, the mortgage payment is £400ish and no other big payments outside of the usual.My broker and I went through an affordability schedule and it worked out fine. I have a 10% deposit. The £300 loan payments are actually split with another family member as well, but it's against my name. I have no concerns about affordability, just how banks perceive this debt. I'm wondering if their focus will be on affordability or if the loan will be a red flag.[/QUOTE]

If the debt is only in your name then the full monthly payment will be assessed for affordability, not just the £300 you pay.