Mortgage with credit card debt (that will be paid off). Help please!

josiejo78

Hi there,

I wonder if anyone can help me. My husband and I seem to be struggling to get a new mortgage and I wonder if anyone can help. We seem to fall down on affordability, despite the fact that we will have more disposable income when we move than we have now!

We are selling our flat and trying to buy a house. We’ve put an offer on the house of £326k. We will have a £50k deposit (equity from sale of the flat). We have a combined income of just under £60k per year. We currently have about £30k worth of debt (unsecured loan / credit cards) but the credit is all managed. No missed payments, no bad credit etc. We also will be paying off all of this debt with the rest of the equity from the sale of our flat. We have no children and once the credit cards and loan is paid off, we’ll have limited outgoings aside from the usual utility bills etc. The reason for the debt accumulating is because we got married last year (we didn’t spend £30k on a wedding don’t worry!) and also spent some money getting our flat up to saleable level - we needed a brand new boiler last year for example which set us back nearly £5k.

Unfortunately it seems that some lenders take the current debt into consideration (which I didn’t realise) and we’ve been rejected for a mortgage by HSBC. I don’t want to constantly apply to loads of lenders and get turned down because I know that would impact on my credit rating, so thought I’d ask if anyone knows of any lenders who will be sympathetic to our circumstances and lend as if the debt wasn’t there (which it won’t be!).

Hope that makes sense. Any help really really grateful received.

Thanks very much xxx

YHM

You need to sit down with a good broker that understands the individual DTI ratios that lenders apply when they assess an application.

DTI stands for Debt to Income and it is a simple calculation of how much debt is in place in comparison to the disclosed income. Some lenders are more relaxed with this, some others aren't