would they get a mortgage?

salXYZ

Hi everyone

My Brother and Sister in Law are currently in a bit of a situation.

They rent their current home in the Sout East and pay an horrendous £1400 per month in rent. They also have around 50K in usecured debts that they are paying off. All well managed with no late payments or CCJ's etc.

They are considering moving back up towards the Midlands and would like to buy a house. They have crunched the numbers and it looks as though they could get a simiar sized to what they have now with mortgage payments of around £850 so a significant saving. Her mother has offered to gift them a deposit, however this can only be used on the house and not the debt.

They earn a decent combined salary of around 85K per year and they are not financially struggling, despite the high outgoings.

Would the have any chance of securing a mortgage with that level of unsecured debt? I would so love them to live nearer

jashdown

*polishes crystal ball*

That’s a high debt to income ratio, which will rule some lenders out.

Get them over to a broker

ACG

Debt in itself is not a deal breaker.
As above it rule some lenders out purely on criteria and it could rule other lenders out at a kind of "sense check" stage (ie it fits criteria and affordability but we dont like the numbers) and other lenders I would all things being equal expect to be fine with it.

Probably is one for a broker though.

Mortgage_Adviser

Will their income be the same as currently once they move to Midlands? Or will hey have to find new jobs that will likely pay less due to location?

Thrugelmir

salXYZ wrote: »

They earn a decent combined salary of around 85K per year and they are not financially struggling, despite the high outgoings.

£50k of unsecured debt would suggest otherwise. Management of personal finances is key to obtaining a mortgage.

salXYZ

Thrugelmir wrote: »

£50k of unsecured debt would suggest otherwise. Management of personal finances is key to obtaining a mortgage.

I get your point, however the debt is well managed and reducing month on month. Surely a good payment history would go in their favour??

ACG

salXYZ wrote: »

I get your point, however the debt is well managed and reducing month on month. Surely a good payment history would go in their favour??

In the main yes.

But put yourself in the underwriters shoes:
No saved deposit.
Debt equivalent of more than half their annual income.
Good combined income.

You have a couple who are on a good combined annual income, no real reason for them to need that much credit, yet they have managed to run it up. At the same time they are relying on a gift to get the property.

I am not judging here in the slightest btw, just being completely frank. Bare in mind an underwriter looks at a credit report, bank statements and an application form. They do not sit down with your brother and get to know them, they are looking at facts and figures.

There is more against this application than there is for. That does not mean they can not get a mortgage at normal rates, it just means, again, putting the underwriters shoes on, why would they lend the money to your brother when they could lend it to 10 people who have saved their deposit and can evidence a lifestyle that is not reliant on credit?

All things being equal, they will be fine. But they wont have the choice of lenders.