New Mortgage adding Existing Debts

Ultimatechezz

Hi all,

I'm trying to convince the Mrs (Rightly or Wrongly) that we should use the £25000 deposit we have saved to buy the house we currently rent to pay off my £25,000 debt (Car/Credit cards) then Pay her £16000 credit card debt and then save together to get the deposit back up (Probably take 5years at £1200 per month if we could do it...

She says we can just borrow more when taking out a mortgage and add the debts to that, we could afford it as we'd be £1000 better of a month or so buy paying off debts with extra mortgage..

Question is if that is possible, great? of not it would mean not owning a house for 5 years and by that time rates and house prices could mean we would be paying a lot more?

Not sure what the best thing is to do?

Getting abit worried as I'd love to pay off our debts 1st...

Any advice is appreciated!

alchemist.1

Pay or reduce your debts as a first step.

Unsure how she thinks you will just add the debts to the mortgage seeing that they are bigger than your deposit and i dont know anywhere doing 100% plus loan to value mortgages.

Mikec1985

I would wonder if you could get a mortgage with the debts you have outlined, really doubt it the way she has envisaged. Although your part of the debt is unclear as a loan for a car is very different to a credit card debt. I would say that you should investigate getting the mortgage first and then do the maths. The interesting advice I can give is that once you have a mortgage and £25k in a property then suddenly lenders will see you as a better bet and would loan you money and credit more willingly and at a lower rate, so the debts should hopefully reduced in terms of interest. Ideally get the mortgage a 2 yr deal and then remortgage in 2 yrs and use the money "if" the property has increased in price to pay off the debts. I personally would be more worried about not having a foot on the property ladder then owing money via credit cards.

Ultimatechezz

Thanks for the replies,

One loan is for a newish car I bought as i'm commuting from cumbria to manchester twice a week. So went from having paid my older car off with 2 years payment free to spending more on petrol and £237 a month on a car, I suppose it was a rush, panic decision as the Mrs was offered a job and we had to move quickly. Some debt was on rent deposit and paying rent mortgage at the same time for 2 months, not great I know, rest on credit cards (£265 month)

I have some other bits and bobs I have a plan for paying off, it's just the big ones Id like to pay off!

The landlord has said we can buy the house we rent which we could afford if debt free...

I am worried that if I paid off debt then things could be way more expensive house wise..but like you say I don't actually think we could get a mortgage for what we need anyway?

I could see the Mrs logic in that were paying the debts anyway so adding them to the mortgage could make sense, but she won't belive me when I say no chance.

I know there there are people far worse off so thanks for the replies!

Thrugelmir

Ultimatechezz wrote: »

(Probably take 5years at £1200 per month if we could do it...

Probably take far less if you really put your minds to it. Debt and savings do not sit in separate pots. Nor assume that lenders will be willing to fund your lifestyle by consolidating the debt you already owe. As the concern will be that a later date you'll be back in the same position once again. Something that your credit history will reflect upon closer examination.

getmore4less

SOmething does not add up

You can't invent money.

You either have a deposit AND money to pay of debts or not.

You can't pay the deposit and then borrow it back on the mortgage that is just a smaller deposit.

How much does the landlord want for the house.

How much cash do you have
what can you borrow. based on income
How much debt do you have
current rent

She says we can just borrow more when taking out a mortgage and add the debts to that, we could afford it as we'd be £1000 better of a month or so buy paying off debts with extra mortgage

we can look at this once we have the Nos, I suspect it won't work.

Ultimatechezz

We got 20k from sale of house, the mrs dad said he would add an extra 5k if we gave it to him to invest.

The loans I have will last for about 5 years. I have an extra credit card which I had to use for moving/other stuff (stupid I know now) which I have a plan for paying off (cutting down on various things) so I'm happy with that. It's just the time to pay off the loans.

He said we can get the house valued, so I would say it's worth about £220,000 but need a definite figure

based on the current situation we could get about £144,000..if the debts were not there about £230,000 (on hsbc calculator so not 100% accurate I know)

I have about £30,000 (including £12,000 for car) The Mrs as £16,000 in credit cards) I'm knocking off 2.5k over next 2 months with an advance from work for a future payrise.

Current rent is £678...I recon about £900 per month to get mortgage..

The mrs doesn't want to touch the money we have, I don't think she wants her dad to know the debts issues we have.

-taff

ANy mortgage lender will look at the debts you currently have before lending you money to see if you can afford it.

spiritless

Your plan sounds like it's relying on a lot of ifs and buts. I don't think I'd be comfortable relying on an advance for a future pay rise for example.

I've been where you are now, and I can tell you that buying a house is incredibly stressful without the added stress of balancing the figures to such a degree. It all comes out in the wash, there is no magic way around the fact that at the moment, your debt is too high to afford the house you want.

Ultimatechezz

I was looking at the advance to help clear the 5k credit card asap, once this is done, I will have about £120 spare, I can then pay off a few other very small bits with that. I will have about £200 spare, I can then over repay one or both of the loans.

If I had the £25k I could pay off all the loans and then use the spare money to get rid of the mrs debts with here and then save up.

But while all this could be happening, house prices/interest rates could be going up...

Maybe get my debts down as much as poss in a year and then see what I can get?

Thanks for the replies!

getmore4less

Thought so

The numbers do not stack up to make buying anytime soon a reality.

£45k debts and around £25k cash

£220k if you went to 95% LTV which will limit lenders and is what the Mrs wants to do, still leaves you with 30k of debt to work with.

Mrs needs a reality check.

£678 on a place worth £220k is 3.7% and you don't have responsibility for the upkeep

Looks like your cheaper renting.

I think your best bet is a review of the current situation to sort out the budget

Debtfreewanabe and a SOA are the starting point