Mortgage - Pay of debts as a condition

FallenGhost

Hello there everyone, hope someone can give me some help..

In a nutshell, my wife is selling her house. We have found another house we like. I intend to get a first time buyer mortgage (my wife currently has a mortgage, and a joint mortgage would be better of course, but her credit is not so good, and theres a CCJ, don't don't want to risk it.).

Basically, I want to know, is it possible to apply for a mortgage, with a condition of paying all the debts off, using the money we make from selling the current house. Is this generally possible?

SO we will be selling the current house, the money from this, will be used as a deposit for the mortgage I will be applying for, but also it will be used to clear my current debt (about 12K). My question is... is there a period where, during the process of selling and buying, where I can apply for the mortgage on a condition that debts will be paid, then when we receive our money from selling the current house, pay off my debts, start mortgage.. ? How would this work.. ?

I'm trying my best to figure all this out :S

ViolaLass

Talk to a broker.

FallenGhost

Just wondered if there was anyone who had similar experience

Oakdene

Well when you go in, you'll do all of the income & expenditure bits obviously which will show up your debts. You can say that you are going to settle the debt(s) with the sale of your existing property.

FWIW I had a £2400 credit card which I had to clear before they would pay out...

FallenGhost

Thanks Oakdene. So I would go thru mortgage app, and explain the debts will be paid off with sale of house. Is this expected to be paid before, or after completion usually? If before, how does this fit in to the process of buying and selling... ?

Sorry if I'm not making sense, things are very stressful at the minute, and I find all the terminology baffling to say the least!

Oakdene

No problem, yeah mine had to be paid off before completion but bear in mind it was my lender that imposed that T&C & I had to show them my card statement being clear...

It may be worth remembering that you are doing this voluntarily & that it may not even factor into the equation from your lenders decision.

FallenGhost

Well, kinda voluntary.. the reason why is I want to try and get a much bigger loan from them you see.. when I calculate it including my debts, it's less than I actually need.. so I hope that factoring the debts being removed hopefully will increase the amount they will lend.. plus I'm self employed... so been trying to get accountant to sort things out has been a nightmare (she's always too busy).. never thought it would be this stressful :O

Oakdene

Go speak to an advisor & be upfront and say that you have the debt but you are going to use the sale proceeds to clear this, they may wish that they've been cleared before completion though...

MortgageMamma

First of all, your wife is selling her home and paying off your debts then you are going to use the equity out of her home to buy the next one purely in you name?


That in my opinion is wrong on a number of levels. Firstly, many lenders will insist on both husband and wife being on the application - you are already financially associated with each other and many lenders will query why she is not going on the mortgage.

Secondly, has your wife considered that this will leave her vulnerable if your relationship ends? These things seem like a good idea at the time but don't always end well. I am not suggesting you are doing anything wrong intentionally but its worth putting some thought into.


Thirdly, your wifes CCJ does not necessarily mean you won't get a decent mortgage product. There are many lenders that would accept a CCJ especially if it is satisfied. Its worth investigating what you could get with both of you on the mortgage before you make the decision not to include your wife in it.


Regarding clearing your debts, be aware that some lenders will require proof they have been paid off at completion, which may mean your solicitor has to make the repayments out of the equity. There is no way around this really. Some lenders are more pernickety than others and requests statements. So yes you can apply for a mortgage before they are paid off and agree to pay them off on or before completion.


I think you need professional advice before you go any further, it will help you get this right first time and save stress and hassle.


See a whole of market mortgage broker.


Kind regards


MM