Debt / Mortgages

pioneer22

Hey guys,

We have approx 5k in terms of debts Credit Card/Loan/Overdraft etc.

None it is unmanageable we're planning on buying in 2 years time with have quite a bit of equity and are looking at overpaying the mortgage for 2 years.

When it comes to securing a mortgage is having that debt going to be an issue?Our plan would be to use 5k of equity to become debt free but I guess its a chicken and egg situation. Will the lender want it paid off before selling or will they be pragmatic and understand what we're doing.

sultanabran

Lenders will take your debt into consideration for affordability calculations. They won't (as far as I'm aware) take any savings into account.

If it's touch and go on affordability, better to clear the debts.

Thrugelmir

pioneer22 wrote: »

Will the lender want it paid off before selling or will they be pragmatic and understand what we're doing.

Lenders will score you on the data available. Why are considering overpaying the mortgage rather than tackle the debt you owe?

pioneer22

sultanabran wrote: »

Lenders will take your debt into consideration for affordability calculations. They won't (as far as I'm aware) take any savings into account.

If it's touch and go on affordability, better to clear the debts.

Thanks it's affordable my salary anyway most of the debts are in the wifes name.

kingstreet

pioneer22 wrote: »

When it comes to securing a mortgage is having that debt going to be an issue?

No.

Our plan would be to use 5k of equity to become debt free

Fine.

Will the lender want it paid off before selling or will they be pragmatic and understand what we're doing.

'Unlikely' to the first, 'yes' to the second.

The term "to be repaid on or before completion" is your friend in this situation.

Most lenders will have no issue, especially if the mortgage is affordable even if that level of debt continued.