Successful mortgage with outstanding debt?

Manchester_123

Hello all,

I am trying to get ourselves in the best position possible before applying for a mortgage next year (12 months from now )

We are child free mid 20's.

Husband earns £31k gross basic but most months comes out with £2400 net with overtime.

My basic is £29k gross , I do some overtime but not regularly.

Whilst we have relatively good incomes the problem is outstanding debt. We are really trying to hammer it down now but I am worried that it will still be a fruitless exercise.

Hoping to buy a house in the region of £150k with a 10% deposit. At the moment our disposable income is about £2k per month so obviously using this to overpay whilst saving up the deposit.

My question really is what effect does credit card debt have on an application? We have no late payments but our credit scores are poor.

Has anyone had any successes?

Thank u in advance x

Thrugelmir

Manchester_123 wrote: »

Whilst we have relatively good incomes the problem is outstanding debt. We are really trying to hammer it down now but I am worried that it will still be a fruitless exercise.

You need to put this into context. As everybody's circumstances are different. Which then provides alternative solutions.

Boredatwrork

If what you say regarding your wages and deposit alone based against the amount you wish to borrow, you should smash it easily.

In regards to: "My question really is what effect does credit card debt have on an application? We have no late payments but our credit scores are poor."

You need to give more details on how much you owe, what your credit scores currently are etc how poor is poor? to get a better picture.
Obviously if you are keeping up with your payments (and hopefully overpaying), these will rise in time, if you are paying the minimum, it will obviously take longer. Based on the payments you are making at the moment, how long do you estimate it will take to wipe these out?

Manchester_123

In terms of actual figures?

We would have about £12k outstanding (o% balance transfer) and a car loan of £300 per month by next year.

Thank you

Thrugelmir

Manchester_123 wrote: »

We would have about £12k outstanding (o% balance transfer)

More or less equates to a borrowed deposit. If you are putting 10% down.

Manchester_123

With all due respect that wasn't my question was it.

Any advice from other positive people would be appreciated.

Boredatwrork

So realistically, your likely to have debt in 12 months time, Maybe a broker would be better suited to comment.
All I can really say is (and pretty obvious really), Overpay as much as you can within that time frame (without causing any early repayment charges), and stay within any your limits on any other accounts/debts you might have. Obviously pay the most expensive interest rate debts first (from what you have said, it looks to be the car one). If you can consolidate all payments into one debt rather than numerous debts, for what its worth it may show the lender you are taking them seriously.

Boredatwrork

Thrugelmi makes a very good point
No debts and no savings = your credit rate rising faster then some debt and some savings.

Thrugelmir

Manchester_123 wrote: »

With all due respect that wasn't my question was it.

Any advice from other positive people would be appreciated.

No problem. I'm out.

kingstreet

Some lenders use 3% of card debt for affordability purposes, some 5%.

Enter your details into lender online affordability calculators with and without the debt and see how your affordability is affected.

kingstreet

One high street lender's calculator indicates a maximum loan of £212k with the debt and £285k without.

Assumes 25 years, no ground rent or service charges, no student loans etc.