New mortgage swop credit cards to 1 loan?

andrew1111

I am looking at a new mortgage and ive been advised that I should get a loan. I have a credit score of 559 nothing adverse or past issues at all. I am employed and have 10k in credit card debt and 8.5k on a loan and 1.8k on an overdraft. If I am get an unsecured loan now for 20k the repayments are £211.98 per month over 10 years. I will then have 1 loan for all no credit card debt and no overdraft. I will cancel all my credit cards except 1 and not use it as I will be paying £211.98 instead of my current payments of £186 for the loan and £35 for the overdraft and £150 against my credit cards. Therefore freeing up spare money to save and this will tidy up my borrowing. Will a mortgage company see this as a bonus or that £20k over 1 loan will stop me getting the money I need. The mortgage man has said I need to pay off my credit cards so this way I feel would be better for a mortgage application as its not messy its one payment and its unsecured loan? Will a mortgage company like this or be wary of it?

YHM

What does your salary look like? Lenders use an internal debt to income calculator that does throw out applications if your overall unsecured lend is to high of a proportion to your income.

There is nothing wrong with tidying up your unsecured finance, but a 20k personal loan is still a considerable debt, albeit relative to your income.

andrew1111

My annual income is £55k

amnblog

and this 'advice' came from?

andrew1111

it came from a mortgage advisor, so I am just checking what he is saying is correct. It sounds right, I have the debt theres nothing I can do about that, but if the credit cards are paid off and cancelled and the overdfraft and this is just one loan am presuming the mortgage companies will agree do you not agree should I not apply for the loan and carry on as I am. I have a lot more disposable income this way and a fixed payment

Thrugelmir

You'd be better advised to tackle your debts. By reviewing your finances and finding ways of reducing your outgoings. Using the spare cash to accelrertate payment of your debts.

Debt consolidation provides an answer rather than the solution. A lender may well have concerns that you'll simply build your debt up again in the future. As your historic credit file will influence their decision.