Getting a Mortgage?

James240

Hi Guys :hello:

This is probably a really stupid question and i apologise if it is

When applying for a mortgage, is any existing debt taken into account when they decide on how much money the Bank/Building Society will offer? I.e. if they offer £100,000 for a mortgage but you have £8000 of debt would they take that off the total and only lend £92,000?I guess the answer would be yes but i thought i'd ask in here first

Cheers guys and gals James

angelavdavis

Not in that sense, no.

What happens is you have to inform them of any outstanding debts you have and, based on the repayments of these debts, the lender will assess how this affects your ability to pay - put simply, whether you can afford to service your debts, living costs and the new mortgage payment.

Obviously, if you have been a poor payer of those debts or are in debt up to your ears, your credit rating is affected, which in turn will affect the likelihood of getting a mortgage or the % deal you are likely to get.

Each lender has its own algorithms for calculating whether you are a good or bad risk customer to lend to. Some specialise in lending to customers with a poor credit rating, but generally you get better rates if your finances are in good health.

James240

ahhh right

Many thanks mate :beer: got a much better understanding of it now