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Good Deposit but bad loan & credit card

femster82
femster82 Posts: 74 Forumite
Ninth Anniversary 10 Posts Name Dropper Combo Breaker
in Mortgages & endowments
Hi,

My first post on this forum so any help would be great.

I am a first time buyer looking at applying for a mortgage at some point soon, but I have a bit of a problem. I want to buy a property for around £260k without HTB scheme.

My income is: £43k
Deposit saved: £25k
Credit card debt: £6k
Loan: £22k until 2020
Monthly repayments: £660

Now the credit card I am planning to pay off within the next 4 months, so not so worried about that. The loan is from Barclays and is very manageable on my salary but I am worried it is way too high to apply for a mortgage. Should I:

1. Wait to pay off some loan and then apply
2. Is there a way for the mortgage to pay off the loan
3. Any advice would be great

Comments

  • foxy-stoat
    foxy-stoat Posts: 6,879 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    femster82 wrote: »
    1. Wait to pay off some loan and then apply
    2. Is there a way for the mortgage to pay off the loan
    3. Any advice would be great


    1. If you overpay as much as possible it will better your chances of securing a mortgage.
    2. If you use some of your deposit then your LTV will be higher.
    3. Speak to the lender to see how the debt effects your affordability.
  • ACG
    ACG Posts: 24,725 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Your income is not enough even without the loan.
    As a general rule you can lend around 4.5x income, 5x as a maximum.
    That gets you to £215k. Add in your deposit and you are at £240k but if you then deduct the loan you could well see that £240k come down.

    Is the loan your deposit?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • femster82
    femster82 Posts: 74 Forumite
    Ninth Anniversary 10 Posts Name Dropper Combo Breaker
    I forgot to say I have car allowance from work but I don't know how that factors into my earnings, considering it is guaranteed.

    So if I could get £215k do you think I could get a 5% deposit deal. Obviously you don't know exactly but just on advice.
  • ACG
    ACG Posts: 24,725 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    How much is the car allowance?
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • femster82
    femster82 Posts: 74 Forumite
    Ninth Anniversary 10 Posts Name Dropper Combo Breaker
    ACG wrote: »
    How much is the car allowance?

    £6k, but I don't know how it works with tax
  • ACG
    ACG Posts: 24,725 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    That gets it in the ballpark. It is VERY tight, but there is a chance it could fit with the car allowance being included. You are going to need to have a play around on some affordability calculators or get a broker involved to find out for sure.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • femster82
    femster82 Posts: 74 Forumite
    Ninth Anniversary 10 Posts Name Dropper Combo Breaker
    ACG wrote: »
    That gets it in the ballpark. It is VERY tight, but there is a chance it could fit with the car allowance being included. You are going to need to have a play around on some affordability calculators or get a broker involved to find out for sure.

    At what point does someone get a broker, when they start looking or after clearing some of the debt?
  • ACG
    ACG Posts: 24,725 Forumite
    Part of the Furniture 10,000 Posts Name Dropper I've helped Parliament
    Whenever you are serious and close to go looking. Best to confirm what is available before setting your heart on something and finding out you will fall short.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • femster82
    femster82 Posts: 74 Forumite
    Ninth Anniversary 10 Posts Name Dropper Combo Breaker
    How do you find a good broker that is well recommended?
This discussion has been closed.
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