30 this month and still saving for first house....help wanted

Mrchelsea2005

Hi all!

I'm new to all this but I have enjoyed reading some of your posts and I'm hoping this forum and you can help me a little!

I'm currently in debt by quite a lot, around the 10k mark. Me and my fianc! are saving for a house, we have 3400 now and I know Martin Lewis always says to clear debt first before saving but this has been saved just by putting the £200 a month away into one of the Help to Buy saving accounts. I just wanted to know if there was any acceptable amount of debt that you can have and the bank will still give you a mortgage. Because surely not everybody that goes to get a mortgage is completely debt free?! My debt basically consists of 4500 on credit card...and 5500 on a loan. 200 a month on cc payments and 350 on loan. Don't judge me please!

Any help would be appreciated and sorry if there are already similar posts out there!

Kynthia

Generally the debt is a lot less than your savings. Otherwise on paper you may as well have borrowed the deposit, which isn't allowed.

Zoology_Dragon

It will depend as well on your income. Debt of £10k is going to matter a lot less on an income of £100k compared to an income of £25k.

Westminster

Whatever debt you have will have will effectively be deducted from your deposit by a bank when they calculate your affordability.

So you may as well do the job yourself now and save the interest in the meantime.

Make sure you pay down the highest APR account first.

Then head over to the debt free wannabes section and post an SOA and you should get plenty of non judgemental suggestions on how you might be able to trim your outgoings further so you can accelerate paying off your debt and ultimately working towards buying your first place.

Grenage

Your debts are most likely costing you more than you would make in interest from your savings.

Sure it's a little depressing 'losing' your savings, but it's the sensible road to take.

hazyjo

They do provide mortgages when you have debt, but they often specify it needs a zero balance on completion, or they just knock it off what they will lend you (plus interest). Quite often, it's easier to just clear the debt.


Painful, I know... c'est la vie.


Look at ways on here to help save, reduce outgoings, or consider a second job.


Jx

csgohan4

Have a lurk around the debt free wannabe section on the forums, but debt will impact your affordability I'm afraid, have a play around with the affordability calculators this website has to offer.

Brock_and_Roll

As the OP is in all likelihood getting naff all on their savings they are in effect flushing £+/-100 a month down the toilet every month in interest payments.


Painful though it might be psychologically to see "savings" disappear, it makes financial sense to use them to snowball the debts - and as other posters have said, the banks will take the debts into account in their affordability calculations so the present situation is merely pulling the wool over your own eyes.

FitzWilliams

Grenage wrote: »

Your debts are most likely costing you more than you would make in interest from your savings.

Sure it's a little depressing 'losing' your savings, but it's the sensible road to take.

I'm going to disagree here. If the money is in a help to buy ISA the interest rate is in effect 25% (the government bonus) plus 2-4% (or whatever the bank is offering) in further interest. The credit card debts can be shifted to a 0% card and the priority would go towards paying off the loan first. I can't see a loan provider charging more than the earnings on the ISA. Unless it's a payday loan.

Miss_Samantha

Unless you have has a sudden large expense that you couldn't avoid there is simply no valid reason to have the kind of debt you have.

So if you're serious about saving and buying a house you should first make sure to control your spending.

Cakeguts

You have got to get rid of the debt. Owning a property means that you have to be good at saving because you become responsible for all repairs. If you can't pay off the debt then house owning is not something for you to do. You have to have a lot of savings when you own a property not just for the deposit but also for unexpected repairs. Owning a property is expensive.