Consolidate credit, pay off overdraft or save larger deposit?

Poetom

My husband and I are hoping to apply for a mortgage this summer as first time buyers. We did consider it last year but put it on hold as we were having another baby. At that time we obtained a decision in principle from halifax for a mortgage with 5% deposit. Nothing has really changed in that time except for using help to buy isas to put our savings in. By the start of the summer we should have around £9000 (including the isa bonus). I currently have 4 credit cards- 2 of which have high interest and 2 that have around half the amount on them as 0% interest for a year (due to end this summer). My total debts would be around £8500 for credit cards, littlewoods and overdraft. My husband has 1 credit card only with a few hundred to pay on it and his car will be paid off next month so apart from rent that is his only expense. Between us we earn around £52,000. My credit score is just in the 'good' section. I have no defaulted payments or anything major. I was asking my cousin who owns an estate agents about mortgages and he suggested getting a loan from the bank to consolidate all of my debts into one. My worry is that they would do a hard search and this would lower my credit score which id worry would take it out of the good category. Would this be a good or bad idea? Also not sure if i should concentrate more on paying off debts or overdraft or saving?(im trying to do an extra night shift or 2 a month to get more money to work with)

Sorry for the essay!

hazyjo

It's like you having a loaned deposit. Purely semantics to say you have debt and a deposit. It's a bit like me trying to put my deposit on my credit card - and lenders don't like borrowed deposits. It means you're taking on 100% debt for the property (except for the spare £500 which won't even cover moving costs).


Saying that, they may well offer you a mortgage, but will also likely be deducting the amount you owe (along with interest and risk monies), so it depends how tight the gap is between what you want to borrow compared what you earn. If you want to borrow the absolute max, you may find it's less than you want. Play around with some calculators online (YBS have good ones) to see what they say.


Good luck!

Poetom

Thanks for the reply. Appreciate your feedback

Thrugelmir

Find ways of tackling your debts. Starting home ownership with a ball and chain around your ankles won't be helpful. Consolidation rarely works. As the benefit is often short term.