Paying off debt and mortgage application

ncrawley

Long story short, we are set to complete a house sale (belonging to my late Gran) this coming Thursday, of which I will receive half of the sale amount. Concurrently to this, we are currently in the process of selling our own house, it went up at the weekend and we have already had 3 offers, 1 of which the asking price but expecting a fair few more offers on Monday.

We have an agreement in place with a seller of a house that we are really interested in that if we got an agreement for the sale of our house within 2 weeks he would accept our offer in his house.

I am pretty confident that this is all going to happen early next week so we will have an offer accepted on ours, and we will have an offer accepted ourselves for the house we want to buy, which means we would be able to proceed with the mortgage/solicitor.

We obviously already have a mortgage in principle however there is something that is concerning me slightly.

We currenty have debts in the region of 16k (a mixture of peer to peer loans which were taken out to do home renovations, a single credit card and also an Argos store card).

Every single bit of this debt will be paid off in full immediately after the inheritance comes through this Thursday. The only debt we will have is the current mortgage which will also be paid off in full on completion of selling our house.

We will have around 40k equity in our current property once it sells for the expected price.

Once all mortgage/solicitor/estate agents fees etc are all paid off and our deposit is paid in the new house, we will still have an excess of 30-40k left over.

The mortgage in principle has been based on us having none of this debt.

What has got me concerned is the fact I read credit reports can take weeks, if not months to show any changes.

Am I worrying over nothing? As ling as I can produce evidence that all the debt has been paid off, will I be ok? Or is this all going to cause issues with our mortgage application?

I really didn’t think about the consequences of paying off the debt at the same time as trying to get a mortgage!

The house we are buying is a dream home so I will be devastated if this will cause any issues.

Please could someone advise?

Thanks!

amnblog

Yes, you are worrying over nothing.

When settling decbt as part of a mortgage application, you do not have to wait for it to come off of the credit file.

ncrawley

amnblog wrote: »

Yes, you are worrying over nothing.

When settling decbt as part of a mortgage application, you do not have to wait for it to come off of the credit file.

Thank you ever so much for putting my mind at rest!!!

Could I just ask one more thing, would it matter if I started the ball rolling for the full mortgage application on Monday/Tuesday before clearing the debt on the Thursday, or should I delay the few days to be on the safe side? I’m guessing it wouldn’t matter as not much will be done in a few days by the mortgage company anyway.

captainusa

I’m in a similar situation. Came into some money and paid off 8k of unsecured cc debt last week. Even though it’s paid off the Halifax put it on application and ticked box saying it will be paid on completion. Hard credit check tomorrow, will let you know how it goes

ncrawley

Yes would be good to see how you go.

Should I have included the debt in my mortgage in principle then? I didn!!!8217;t include it as I knew it would all be paid off before the mortgage application was completed, maybe I have made a mistake and should inform the mortgage company about this now?

amnblog

If it is still on the credit file at application it needs to be declared to the Lender.

ncrawley

Ah slight mistake in my part then. No problem, says I can edit the information so will get that sorted and I can see now it gives you the option to confirm that it won!!!8217;t be in place when the mortgage starts. Wish I had seen that to start with!

captainusa

Well, passed hard credit check with Halifax. 1 month ago had 22k unsecured CC debt. Paid off 8k last week and promised to pay off 14 with equity of my house sale. They are willing to lend me the 246,500 I need. Only require one payslip too!