Mortgage with debt and relatively high income

jester8080

Apologies, i'm sure there is a wealth of information about this already, but would appreciate some specific advise based on my circumstances.

I'm 37, run my own business, earn approx £3,200 per month net, but unfortunately i have around 25k of debt and i'm currently renting (to the tune of £750 p/m).

Finding it exceptionally difficult to 1) get out of debt (i have 3 kids and lots of debt) and 2) get enough money together to get a deposit.

Roughly speaking, if i could get 10k together (via the business at the end of the year) would it be possible to get a mortgage? I can afford the repayments on a mortgage as i'm managing fine with rent. I can't afford (anytime soon) to save for a deposit and pay off all the debt.

What is my best strategy to get on the housing ladder as quickly as possible?

Many thanks

amnblog

We don't know the property prices where you live but perhaps you should consider the Help to Buy Equity Loan Scheme.

https://www.helptobuy.gov.uk/equity-loan/equity-loans/

From 5% deposit. Up to 20% interest free loan. 75% Mortgage.

New home with next to no maintenance or heating cost.

Before you get too excited, get a broker to check the maximum affordability for you.

jester8080

I'm in Leicestershire so not terribly expensive.

Sounds good, what about the debt i have, will this be a big problem?

kk20

do you want to consolidate the debt or leave it where is it? If you want to consolidate then it would simply be a property price + debt as LTV i.e. how much deposit you have for the house.


If you want to leave the debt where it is then it will be LTV on property with affordability based on loan AND debt repayment. i.e. a lower initial deposit to satisfy the LTV but affordability based on both.


Either way affordability will be taken into account but it depends on whether the current debt is a HIGH affordability (high repayments) or low. It also depends on the LTV vs deposit etc.


Self employment means you will need x years accounts for the lender to peruse.

jester8080

Do you mean consolidate the debt into the mortgage? If so i didn't realise this was possible.

Of the 25k debt 19k is a single loan payment of £400 and the rest is credit cards/overdrafts.

I'll have 3 years of accounts by next Feb. Hopefully that's enough.

kk20

A mortgage on a house can have additional borrowing. Some vendors like you to have a mortgage for a set period of time. there are a wealth of mortgages out there. Have a chat with a broker.

sammyjammy

You cannot consolidate that debt into your mortgage, if I were you I would concentrate on paying that debt down, if you have no spare cash to do so then IMO you shouldn't be buying a house!

jester8080

I appreciate what you're saying. We are paying the debt back just not quickly enough. It seems pointless spending £750 p/m on rent when that could be going into a mortgage.

strongboes

You need to put everything into paying your cc off, once that is gone you will be in a stronger position obviously, you can then also save more deposit.