Advice for potential first time buyers with debt

Xabi

Hi I was hoping people could give me some advice.

I currently live with my girlfriend in a rented house. We're looking to buy somewhere together for the first time but we have some debt. I have a tesco personal loan which currently stands at £11,000 paying £250 per month and a maxed out Egg Credit Card at £5000 paying back £120 per month. My girlfriend has a student loan for £10,000 and a £2,000 overdraft. I think we both have quite good credit scores but I went over my CC limit a couple of times earlier this year which seems to have affected my rating a bit.

I earn £23,000 per year and she has just got a job after Uni earning £20,000. We currently pay around £1000 per month in rent and bills.

We would like to buy a house for approx £140k. What i would like to know is what options are available to us regarding our debt and should we buy in the current climate or continue renting, try and pay off our debts and save a deposit?

How much could we expect to borrow on our salaries? Would they give us 4 times our income i.e. £160k?

Would anybody lend us more than the property was worth in order to consolidate our debt so we would only be paying one monthly payment?

kevinchapman82

Yes, have a look at Northern Rock, Alliance & Leicester, Coventry and BM Solutions.

PasturesNew

DON'T DO IT!!!!

Seriously. Clear your debts first.
Save hard.
Then try again in 2-3 years' time once you're clear of debt and have saved a deposit.

To buy a house of £140k aim for a £14k deposit... hell, even £7k would be pushing it. And don't forget - you'd need £2,500-3,000 just for fees/searches/duty.

Then there's the furnishings!

Owning a house is much more expensive than renting one. You have to provide the furniture/stuff. You have to fix things when they break (£3k for a new boiler and there's NO warning). You have to additionally insure the building itself.

Having said that, with a combined takehome of a WHOPPING £2700/month ... it's not impossible at all is it

Debt_Free_Chick

Have to agree - pay off your debts first.

riad_2

Personally I would pay off all the debts first apart from the student loan.

Reason I say apart from the student loan is because that's payable automatically out of your girlfriend's payslip anyways over time and is on a FAR lower rate of interest than the mortgage...!

With your combined income (which is GOOD!!!) if you save hard for a bit you'll be able to pay them off quite quickly (within 1-2 years)... and if you can save a 14k deposit in addition for the deposit (as well as 3k approx for fees) it will save you from paying a higher lending charge.

People are saying that house prices aren't going to be rising too fast in the next couple of years (altho who knows eh!)... so don't worry too much about delaying getting on the ladder for 2 years or so... it'll save you a lot of struggle in the future.

In the meantime try and do some moneysaving by transferring the 5k credit card onto a 0% card for 12 months (RBS are doing 13 months 0% i think?) if it's not already on a special rate. I think MBNA do "super balance transfers" which cud to pay off your loan (but I dunno... anyone else know?).

claireabelle_2

I wouldn't do the debt consolidation - I nearly did earlier this year, and so glad I didn't after checking www.whatsthecost.com, it said I would have paid almost 30k in interest on my 30k debts over 25 years instead of 2k over 2 years paying them before buying (which is my *gulp* target!)