Debt consolidation

[Deleted User]

To add to the above, the new mortgage (if you do it now) will almost certainly appear as a new record on your credit file - either the 'top up' amount (making it blatantly clear to future Underwriters that you've done debt-con recently, which is potentially a big concern) OR the entire amount showing as new (where they could then still deduce that and/or query it with you, slowing down your new app).

Plus you'd have the extra credit search on your file and the impact that may or may not have on your internal credit score with the lender you're looking to buy your new house with.

As above I'd avoid it and just clear debts with equity and get a higher LTV (lower deposit) mortgage in your new home.

I've done cases where clients have significant debts and will repay them with the sale proceeds. Although sometimes it's queried, £20k on loans/cards is relatively low (assuming 2 earners / a reasonable income) so I can't imagine it would cause you too much trouble at all.

I'd go to a broker when it comes to moving to ensure you get the right lender, but as long as you're meeting payments I think it's definitely a good idea to just concentrate on paying it down as best you are able to for now.

If you were saying the move was in over a year, I'd probably lean towards re-mortgaging now (again, assuming the cons of debt-con have been fully explored) - but with < 1 year I'd avoid making any changes and avoid too many unnecessary credit searches/account openings (Utilities etc. are sometimes needed, but you don't really want to be opening cards/loans/bank accounts as it could give the wrong impression)

Retired_Mortgage_Adviser

I'd echo the below but if you are set on consolidating the debt now as opposed to when you move soon, I would recommend getting in touch with a broker sooner rather than later. As Somerset said, 20k unsecured debt to consolidate on to a mortgage is (relatively speaking) not a huge amount.

Your options will be limited (due to the need for an ERC free product that allows debt consolidation) and for all practical purposes the LTV will be restricted to 85% max. There are 1-2 lenders who might go up to 90% on a debt-consolidatoin remo, but they come with very high rates.

I wish you the best!

Somerset_La_La_La wrote: »

If you were saying the move was in over a year, I'd probably lean towards re-mortgaging now (again, assuming the cons of debt-con have been fully explored) - but with < 1 year I'd avoid making any changes

Thrugelmir

Jananne19 wrote: »

By your logic no one should buy a house until they are 60 and have saved £300k. It may work out better interest wise and on paper but is defeats the object of buying a family home.

I appreciate your advice but the post wasn't about my priorities or whether to get more debt. It was about whether a remortgage now would impact on being accepted for another mortgage when we move.

My logic would be to build equity while you can as opposed to leveraging with debt. An observation that comes from having worked in finance for far too long. A little patience could make the future even more rewarding.

People can be categorised in certain types of potential borrower. Far more predictable than people imagine. All part and parcel of lenders underwriting and risk management.

millwalls

:T Indeed!

Probably the fourth time you've made clear that you aren't asking about the rights/wrongs of debt consolidation.

Jananne19 wrote: »

By your logic no one should buy a house until they are 60 and have saved £300k. It may work out better interest wise and on paper but is defeats the object of buying a family home.

I appreciate your advice but the post wasn't about my priorities or whether to get more debt. It was about whether a remortgage now would impact on being accepted for another mortgage when we move.

BelowTheLine

It's unfortunate but I don't think he can help himself. Look at his other posts on the forum, they are often in the same mould with off topic advice delivered in a hectoring and patronising manner with a large dollop of condescension.

It is a bit sad, considering that this kind of behaviour can put off newbies from seeking advice on public forums, completely opposite to Martin Lewis' approach.

Jananne19 wrote: »

Indeed!

Probably the fourth time you've made clear that you aren't asking about the rights/wrongs of debt consolidation.

Thrugelmir

BelowTheLine wrote: »

It's unfortunate but I don't think he can help himself. Look at his other posts on the forum, they are often in the same mould with off topic advice delivered in a hectoring and patronising manner with a large dollop of condescension.

It is a bit sad, considering that this kind of behaviour can put off newbies from seeking advice on public forums, completely opposite to Martin Lewis' approach.

What's your experience from working in the finance industry in any capacity?

PS. Martin Lewis is here in name only. As sold his shareholding in 2012.

NJamesN

We did something similar a couple of years ago, moved about 35,000 (2 personal loans which were mostly spent on home improvements) on to our mortgage and then moved home about 14-15 months later. So we ended up with 3 different lenders in that period. If I remember correctly, our broker found it pretty simple to sort it out both times.

Given that you haven't even started looking at properties, it could well take in excess of a year to complete your home move. If the higher payments won't be affordable in that period, you might as well look at consolidating the expensive debt on to your mortgage.

Have you asked your existing bank if they will allow additional borrowing for debt consolidation?

Jananne19 wrote: »

We're hoping to move in the new year to a house approx £60k more than we're in now. We have 20k of debt after an expensive few years that we want to add onto the mortgage as the payments are £700 which is affordable but a struggle. We've weighed up whether or not to do this and sat and did the sums so don't need advice about adding debt to mortgage.
But we are thinking of apply for a new mortgage and consolidating now, in a tracker so we aren't tied in.
Thought this would be better as it would mean we could save the money that isn't going on repayments to put towards moving costs/decor.
Also thought it might be better as when we go to move and apply for more to move we aren't having to worry about being declined due to debt repayments.
We would still be well within our affordbaility.
One of the things I am concerned about is whether it would impact our credit rating/chances of being accepted if we're taking out a mortgage now and then again in 2/3 months when we move ?