mortgage application- what to do

kezzygirl

Hi all, I have posted previously regarding our debt and current savings and plans for buying a property. Our situation is currently-

husband working full time paid hourly £17500 pa without overtime/extra shifts

Me, salary £26565, also work bank shifts, earning appox £4000 per year

We have savings in various high interest (5%) accounts totalling £6215....we are saving for a mortgage.

We have a loan from santander with a balance of £4726 (£176 per month)
I have a credit card with £1400 on
Hubs has a card with £2700 owed

My plan is to pay off hubby's credit card before christmas and then focus on putting all of our spare money into the savings. We were saving £400 per month but stopped this about 4 months ago in order to pay the debt, however my thinking now is that it is possible we could get a mortgage whilst still owing the loan to santander, I have done a mortgage calculation and halifax have suggested they could lend £202,000- we wouldnt want that much.

My plan is: save at least £15000 before applying for a mortgage which we can do over the next year, would it be wise to pay our spare funds to the santander loan before ploughing our money into the savings for a mortgage? Or pay into the savings as much as we can despite having the loan?

We also have a ppi payment from capital one(£575), which I planned to put into the savings, or should I pay it off hubs' card?

interested to hear views, thanks

ACG

Having debt is not an issue in the main, providing it is affordable.

National_Debtline

Hi Kezzygirl,


I agree with ACG, that the money you owe wouldn't necessarily stop you getting a mortgage if it is all up to date, but the monthly payments to these debts would be deducted from an affordability check and that may affect how much you can borrow.

Mortgage applications are quite detailed now a days, and they will do a credit reference check and an affordability check. You should consider the interest you are earning from your savings, versus the interest you are paying on the credit as well.


Laura
@natdebtline

Thrugelmir

What rates of interest are you paying on the debt? You need to borrow again in the future for a major item of expenditure.

A HTB ISA or LISA maybe a more effect way of saving.

kezzygirl

Thrugelmir wrote: »

What rates of interest are you paying on the debt? You need to borrow again in the future for a major item of expenditure.

A HTB ISA or LISA maybe a more effect way of saving.

The credit cards are both 0%interest....mine until 2019, hubs until Aug 2018. The loan with santander is something like 4%. We have a lisa open with a view to transfer £4000 into it in April. The interest rate is shocking....both of our htb isas are 3.5%, but we won't be using these to purchase a house, we will just use 'my' Lisa as you cannot use both. Our savings are all currently tied up in nationwide, paying 5% interest on each account.

kezzygirl

National_Debtline wrote: »

Hi Kezzygirl,


I agree with ACG, that the money you owe wouldn't necessarily stop you getting a mortgage if it is all up to date, but the monthly payments to these debts would be deducted from an affordability check and that may affect how much you can borrow.

Mortgage applications are quite detailed now a days, and they will do a credit reference check and an affordability check. You should consider the interest you are earning from your savings, versus the interest you are paying on the credit as well.


Laura
@natdebtline

thankyou, it is all up to date and we have worked hard to increase our credit rating hAving been in financial difficulty previously. The savings accounts are all 5%. Hubs has money in a 3.5% htb isa. Our credit card debt is 0% interest