Your starter for 10..

I have a total debt of £11,959 on 2 cards, both currently interest free, costing me £240 per month.

I am looking to get on the property ladder shortly and need to have the best credit rating possible, so should I:

a) Take out a consolidation loan to clear the cards and be safe in the knowledge that my debt is definately reducing each month.

b) continue making minimum payments knowing the interest free period will soon be up.

c) make overpayments each month to clear the cards

d) other

Further questions worth 5 points may follow.


  • Willsnarf1983
    Willsnarf1983 Posts: 1,928 Forumite
    look up snowballing on

    personally i think u need to be overpaying ur debt and getting rid of that asap. don't consolidate coz then ur payin interest. other people shud be able to help u as well

  • Murtle
    Murtle Posts: 4,154 Forumite
    First Post First Anniversary Combo Breaker
    can you afford to repay the debt?? if so monthly/ or all in one go??

    or are you struggling to repay the debt??!!!

    sorry it's just not clear from your OP
  • ceegee
    ceegee Posts: 856 Forumite
    Don't take out a consolidation loan......very expensive and also you are looking to be paying a mortgage too! Way too much commitment here......what if you lose your job? It does happen you know! :eek:

    Do you have a deposit for a property? It seems to me that you may be trying to run before you can walk. Do post more details of your financial situation and then we may be able to offer some sound advice! :cool:
    :snow_grin"Let it snow, let it snow, let it snow........":snow_grin
  • margaretclare
    margaretclare Posts: 10,789 Forumite
    If you have debts you shouldn't be trying to 'get on the property ladder' as you put it. Having a property means much more than paying out on a mortgage (and in your case, paying out on a consolidation loan or similar). To get on the property ladder you need to have paid off your debts, not 'consolidated' them, and you need to have some savings for a deposit, as ceegee says. Buying a property involves other costs - searches, surveys, conveyancing costs, and then when you have the property you have to furnish and equip it and you are totally responsible for the maintenance - keeping it in repair, having something in reserve to pay for e.g. boiler breakdown, you name it.

    'Getting on the property ladder' is not the be-all and end-all of life.

    Aunty Margaret
    [FONT=Times New Roman, serif]Æ[/FONT]r ic wisdom funde, [FONT=Times New Roman, serif]æ[/FONT]r wear[FONT=Times New Roman, serif]ð[/FONT] ic eald.
    Before I found wisdom, I became old.
  • sfell
    sfell Posts: 64 Forumite
    I appreciate the concept that you should pay off all debts before buying a house, but I'm afraid for most new graduates thats impossible!I myself have around £6,000 extra debt on top of £12,000 student loan, I worked all the way through Uni and have two jobs now!

    I managed to get a mortgage with out too many problems, What they look at is your affordability, so if you can prove that it's affordable i.e. you'll be able to pay both cc and mortgage. Wish you all the luck, just don't take too much on! :money:
  • Xbigman
    Xbigman Posts: 3,887 Forumite
    Name Dropper First Anniversary First Post Combo Breaker
    Student loans are slightly different to running up credit cards and banks/building societies accept this.

    Having debts will reduce the amount of a mortgage you can get as many lenders knock it off the max they will lend you. Also, taking out a consolidation loan now could look like you borrowed the money for the fees / deposit. This is something else that looks bad to a lot of lenders.

    Pay off your debts, save a 5% deposit plus 2k for fees and then try for a property. There's a current news story about it taking 5 years to save to buy a house, which for most people is about right.

    Xbigman's guide to a happy life.

    Eat properly
    Sleep properly
    Save some money
  • Malestrom
    Malestrom Posts: 983 Forumite
    I'm afraid that I don't agree with the sentiments of some of the posts above. There is nothing wrong with wanting to get on the property ladder whilst having existing debt IF you can afford to meet the relevant costs and repayments for both.

    Stating that you shouldn't take out a mortgage until you've cleared your existing debts is fine on paper but unrealistic for many people in the real world. We know nothing about the OP's income or the value of the property that they are looking to buy, so I think it is unwise to pass such blanket judgements.

    Also, some lenders do not take into account any existing unsecured borrowing that you have, one of these is the Yorkshire Building Society as I know from personal experience. The Yorkshire were recommended to me by my IFA when Abbey turned my mortgage application down due to existing credit debt. I've been with them for 3 years and am very happy.

    I would agree with not consolidating your existing debt and I wouldn't advise you to roll it into your mortgage if you were considering that. Have you tried applying for another 0% or possibly a LOB (Life of Balance) card, as you seem to be implying that your current 0% deals are nearing an end? LOB cards are far better in my opinion as the interest rate on the best ones is very low (sub 5%) and you only have to change to them once, rather than applying for a new card everytime an introductory period ends. I would stress that you MUST have a robust budget before entertaining thoughts of buying a property and I would point you in the direction of Martins Budget Planner at the top of the page in the blue banner.
    He huihuinga taangata he pukenga whakaaro – A meeting of people; a wellspring of ideas (Maori proverb)
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