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Will new loan, consolidating debt effect my chance of a mortgage?

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Hi.
This is my first ever post, so please be gentle!

I currently have a CC and a loan. My bank have offered me a loan at a much lower APR (4.9%) which I though I could use to consolidate my more expensive debt.

Does that seem like a reasonable idea?

Next question:
I want to apply for a mortgage next year so I am also saving my deposit. If I clear my debt with this bank loan, will that negatively effect my chances of mortgage acceptance?

Thanks in advance. X

Comments

  • You're just swapping one debt for another. It's not an issue
  • Xbigman
    Xbigman Posts: 3,915 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Combo Breaker
    On the other hand saving whilst you have a debt is the wrong way to go about it. Pay off the debt first and then save is the right approach



    Darren
    Xbigman's guide to a happy life.

    Eat properly
    Sleep properly
    Save some money
  • foxy-stoat
    foxy-stoat Posts: 6,879 Forumite
    Eighth Anniversary 1,000 Posts Name Dropper
    Have you actually been offered that rate or is it just a poster in the branch or offer on the website?

    If you get a lower rate then take it but try and keep the term to the shortest length possible, clear your other loan and pay your cards off and cancel them ALL, dont leave yourself an option to rack up more debt or you will be back here in a year or 2 with twice as much debt.
  • sourcrates
    sourcrates Posts: 31,516 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    Daisy2011 wrote: »
    Hi.
    This is my first ever post, so please be gentle!

    I currently have a CC and a loan. My bank have offered me a loan at a much lower APR (4.9%) which I though I could use to consolidate my more expensive debt.

    Does that seem like a reasonable idea?

    Next question:
    I want to apply for a mortgage next year so I am also saving my deposit. If I clear my debt with this bank loan, will that negatively effect my chances of mortgage acceptance?

    Thanks in advance. X


    Hi,


    You won`t be clearing your debt though, you will just be moving it elsewhere, in fact your debt will increase with the consolidation loan.


    How did this debt accrue ?


    Have you changed your financial behavior to make sure you won`t just run up these debts again ?


    Consolidation of debt can be the start of a very slippery slope if not properly managed, and in order to manage it correctly, you must learn to live within your means, as further debt can be catastrophic to your plan.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Clive_Woody
    Clive_Woody Posts: 5,937 Forumite
    Part of the Furniture 1,000 Posts Name Dropper Photogenic
    Possibly if by reducing the APR it means you pay less each month so can then make overpayments to clear your debt quicker then theoretically in 12 months time you will have a lower outstanding balance...assuming of course that you dp make the extra payments and also you don't run up a new balance on the CC.
    "We act as though comfort and luxury are the chief requirements of life, when all that we need to make us happy is something to be enthusiastic about” – Albert Einstein
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