Application straight after clearing debt

Dinosaur34

We are due to complete on the sale of our property in the next few weeks and currently looking to buy our next property. From the sale of the property we intend to use some to pay off creditcard debt (£30k) whilst retaining enough for a 10% deposit. Plan to use a broker but just a little concerned with the numbers coming up with the soft search AIP's given the level of current debt. Is it best to apply after paying off the debt or would we realistically have to wait for the credit reports to be updated to show cards are paid off?


Many thanks for your help

ACG

Dont worry about it. Your broker will be able to sort it out.
But just to offer some reassurance, usually on an application form where it asks about debt, there is a tick box asking if it will be cleared by completion of the new mortgage.

Some lenders will count the debt unless it is cleared and updated on the credit report, but those are lenders you will probably need to avoid. No reason for you to not get a normal rate and a normal lender though...relax

Dinosaur34

Thanks ACG. The paid off debt wont count against us even if looking for a relatively high income multiple?

Dinosaur34

And just to add, the soft search applications that I have done I have stated that the debt would be repaid before completion and the amount they would lend appear low.

ACG

The debt being cleared will not be counted against you with many lenders. There is no need to do DIPs even if they are soft footprints. Just plug it in on affordability calculators instead or speak to a broker as you plan to and let them tell you what you can get.

Dinosaur34

Thanks ACG, the affordability calculators provide a much higher value that we can borrow so hopefully you are right and once we discuss this with a broker we can progress