Mortgage with existing debt

llcooljayne1

Hi everyone, so myself and my partner will hopefully be in a position early next year to buy our first home. However we have a significant amount of debt and I’m worried that we have no hope of securing a mortgage. My parents will be giving us the deposit. Is it pointless trying for a mortgage and should we just continue renting until the debts are all paid off?

Many thanks!

Onemanandtwolittleladies

How’s long a piece of string? How much debt do you have? What price property are you considering? What are your salaries? Do you have any dependants?

Generally you’ll be able to borrow 4.5x your combined salaries, minus your total debt.

Personally I think renting is dead money and you should buy a house as soon as possible to begin paying a mortgage, never mind that in a lot of cases a mortgage is cheaper than rent on an equivalent property.

Determinedtobedebtfree

Hello, we've just had a mortgage accepted. We have approx. £14k of credit card debt and a £23k personal loan (combined salary of £66k pa). We have excellent credit scores and no CCJs. We've been renting for ages because we didn't think we could get a mortgage with debt. Our broker assured us that we were excellent candidates and we went from DIP to mortgage offered in 4 days...how I wish we hadn't waited so long! I would speak to a broker and good luck!

llcooljayne1

Oh that gives me some hope Determinedtobedebtfree! We have between us £3500 on credit cards and a £22k personal loan. Our joint income is about £60k. We have been renting for years too, we have two little girls and I just want to make sure we have the security of our own home as with renting you never know how long it will be for x

Determinedtobedebtfree

auntloo we were so nervous putting in the application but were assured that we were absolutely fine and the broker didn't bat an eyelid! We are due to settle on Oct 18th, it's all been so quick! I would defo speak to a broker and good luck!

Mortgage_Expert

Hi auntloo, you have a debt to income ratio of £25,500 / £60,000 = 42.5% which is relatively high and may restrict your borrowing potential and lender options. However, this doesn't preclude you getting a mortgage altogether if the lender of choice deems your mortgage payments affordable with your unsecured debt commitments outstanding. It would be well worth consulting a mortgage broker who can match you to the right lender, and advise on whether it might be a good idea to use some of the parental gift to pay down debt, to optimise mortgage potential

foxy-stoat

You will be able to get a mortgage, just depends on the multiples as high debt will reduce the amount you can borrow.

salXYZ

Mortgage_Expert wrote: »

Hi auntloo, you have a debt to income ratio of £25,500 / £60,000 = 42.5% which is relatively high and may restrict your borrowing potential and lender options. However, this doesn't preclude you getting a mortgage altogether if the lender of choice deems your mortgage payments affordable with your unsecured debt commitments outstanding. It would be well worth consulting a mortgage broker who can match you to the right lender, and advise on whether it might be a good idea to use some of the parental gift to pay down debt, to optimise mortgage potential

We have been in a similar position recently but we have decided not to move yet. Our broker said that the debt to income ratio is based on monthly debt payments and not total debt. Our debt is significantly higher at 58k. with £1400 monthly payments our gross monthly income is 7k.

Our broker calculated our debt to income by dividing our monthly debt payments by our gross montlhy income - 1400/7000 = 20% Debt to income.

Surely it's the monthly payments that need to be considered and not the total debt?