Effect of credit card debt on mortgage

Manchester_123

Hello everyone,

Looking for a bit of advice / any others who have had some recent success just to see whether we are completely wasting our time or not.

We are a married couple 27 years old. From foolishness on our part we hold our hands up and admit we had made some silly choices in the past leading us to have accumulated a scary amount of unsecured debt. Husband has about £26k on credit cards, as well as a monthly personal bank loan of £232 p/m.

I have around £6k on cc's, a personal loan of £250/ month and a car on PCP for £300 / month.

The saving grace (if there is one!) is that we both earn relatively good salaries with a combined annual income of £67k gross, plus overtime.

Also we have never missed any payments, no defaults, ccjs anything like that. Obviously our credit scores are poor due to the amount of debt I guess.

We have rented for the past 3 years with no issues and our plan was to really hammer down on reducing our debt to get ourselves in a better position for next year to see if a mortgage is possible. However a local house has come up for sale which is a bargain and we both know that we love that style of house. I am pretty sure they would accept an offer of £115,000.

So we find ourselves in a position where we have a 5% deposit saved up but I am scared about the level of personal debt we have.

Would you even bother to try and apply or will I get laughed out of the door. Annoyingly after all of our bills / credit commitments and living expenses are taken care of we have approx £1500 disposable income (which admittedly we had previously used to reduce some debts and also spend on holidays!)

Sorry for the long waffling post it's just that we have an appointment to view set up for Saturday and now I am in two minds thinking is it even worth going in case we fall in love with the place and then there is no chance of getting a mortgage.

Thanks for any advice / similar stories in advance

Candyapple

What is the total amount owing of your husband's personal bank loan?

What is the total amount owing of your personal loan?

What is the total amount owing of your car finance?

How much in total do you have savings?

ACG

The bad news is that some lenders have "Debt to income" calculations in the background. So as a general rule, if your income is around 30-50% plus of your annual income, they will automatically decline.

The good news is that not all lenders have this rule and so you should be fine. But this is something you will need to check before applying so as not to waste doing unnecessary credit checks.

It should pass affordability, but again, it would need checking before applying.

Manchester_123

Thanks ACG, I was thinking that we have no chance with a high street lender so would be prepared to pay the price with higher rates, I am going to consult a mortgagr broker whom specialised in bad credit history, hopefully they may be able to help!

Would be good to hear from others if they have had any similar experiences

Thank you

Manchester_123

Candyapple wrote: »

What is the total amount owing of your husband's personal bank loan?

What is the total amount owing of your personal loan?

What is the total amount owing of your car finance?

How much in total do you have savings?

DH personal loan about £10k o/s
My loan £9k
Car finance is a pcp so technically we hand it back in 2 years, monthly payment £300ish
Savings only have about £7k.

My dad could help me out for a better deposit if needed but I don't really want to ask as it's my fault we are in this mess so feel I should let be asking for help.

Thank you

ACG

You'll get normal rates unless you have bad credit?
Having debt is not a problem, it is only if you are not paying it.

AFK_Matrix

Manchester_123 wrote: »

DH personal loan about £10k o/s
My loan £9k
Car finance is a pcp so technically we hand it back in 2 years, monthly payment £300ish
Savings only have about £7k.

My dad could help me out for a better deposit if needed but I don't really want to ask as it's my fault we are in this mess so feel I should let be asking for help.

Thank you

You should have the total amount for the pcp on your documents, you'll have to find this out as the mortgage broker will want that figure as well as the monthly amount. For instance I pay 218 pm for my pcp, but the total amount is 19k. Dig out your documents and find that total figure out or phone up the finance company if you can't find the documents.

MrMortgages

Speak to a broker.