Consolidate debt for a better mortgage?

DebtConfused

Hi all,

My partner and I are looking to apply for a mortgage within the next month or so. We have spoken with a mortgage broker who has told us, based on our income/outgoings, the type of mortgage we can afford.

I am really worried about the application as neither of us have much of an idea what companies are looking out for, nor do we have good credit ratings (we pay our bills each month, it was just being frivolous when we were younger that lead to high debt).

I currently earn just shy of £1400 a month and pay out:

267 loan
200-250 on credit cards
60 store cards
40 car insurance
40 phone bill
8 life insurance

Scary hey. My partner earns more money than me and has less outgoings than I do. However, is it better for me to take a bank loan to consolidate everything for a lower monthly outgoing - and cancel my two credit cards and two store card accounts? Will that look better in terms of monthly affordability or will it jeopardise the mortgage full stop? I'm so confused with what to do and I don't have much time to sort it!

Any advice or help anyone can give is appreciated. Thanks

HappyMJ

You really need a deposit. If you have debts then it's unlikely you have a deposit big enough to cover your debts and some equity in a property.

Paying out so much in loan, credit and store card payments will reduce your affordability for a mortgage so much so that any offer will be small or non existent.

I'd get those debts paid off and get a deposit saved up before considering buying a property in your name.

Banks can lend to the partner with no debts and not take any of your income or debts into account if that's what you need to do, you might want to consider letting your partner buy in their name only and then over the next few years sort your own debt out then save and offer to buy into the property some time in the future.

DebtConfused

Thank you for your advice. My partner does have debts too just on a small scale, so in terms f disposable income it's a lot higher. We have a deposited saved of about 30K to cover that and fees - looking at houses about 230 (which we've been told we could afford if it came to it)

amnblog

You have consulted a broker and that is your best source for answers on these kind of questions as presumably they understand your full position.

Thrugelmir

DebtConfused wrote: »

T We have a deposited saved of about 30K to cover that and fees

Little point in paying higher rates of interest on borrowed money. I would suggest clearing your debts and then rebuilding your deposit.

Jhoney_2

Pay off the loan, credit and storecards. They are probably costing you a lot more in interest and/or will significantly hamper your mortgage offer amount.

Well done for the savings side, though! It's great that you have the mindset to save and have done so. That's the way forward and you have already started.

getmore4less

saving by borrowing money is not really saving.