Applying with Debt

ian_737

Hi all,
Can someone please provide me with some guidance with the following?
I'm a first time buyer and I have £18,000 for a deposit. I currently have £22,000 in debt. I would like to apply for a mortgage which enables me to put an offer on a house as well as pay off my debt. 

My first question is; is this possible and if so, does it restrict my options for providers?

My second question is; if I have 18k, and the house I want to buy is £180k, plus my 22k debt, would I need to apply for a mortgage of £184,000?

grumiofoundation

You won’t be able to get a mortgage that is larger than the value of the house you buy. 

LillyTC

In the current climate the most you will be able to borrow is 90% of the property value and those mortgages are limited. You won’t be able to do any debt consolidation as your debts are higher than your savings. Have you thought about using your savings to pay off your debt instead? Alternatively, depending on affordability you could leave the debt and use the £18k as a deposit but that will impact how much you can borrow. 

FTB_crossed

What’s is your annual income. You need to suffice the affordability requirement and then if that’s satisfactory, debt won’t be an issue. 

By looking at the above figures, you need to be earning at least £36k per year to qualify to qualify for 90%LTV with LTI of 4.49.
Anything less on income would then require you to pay off the debt first. 

foxy-stoat

ian_737 said:

Hi all,
Can someone please provide me with some guidance with the following?
I'm a first time buyer and I have £18,000 for a deposit. I currently have £22,000 in debt. I would like to apply for a mortgage which enables me to put an offer on a house as well as pay off my debt. 

My first question is; is this possible and if so, does it restrict my options for providers?

My second question is; if I have 18k, and the house I want to buy is £180k, plus my 22k debt, would I need to apply for a mortgage of £184,000?

1) Yes you are going to be restricted.
2) 100%+ mortgages havent been a thing for a long time.

As above, pay your debt down and lower your expectations for your first property.

ACG

You can only get a maximum of 90% of the lower of the purchase price of valuation. 

You can not then also secure debt against the property if that means the LTV will go above 90% and your definitely cant do it to go in to negative equity. 

£22k worth of debt must be costing you a small fortune to service each month. It is not normally what I would suggest and I suppose it may depend on whether you are renting or living with mum and dad, but have you thought about wiping out your debt or even sat £10-15k of it and then with the extra few hundred quid bumping up your savings to get to the 10% again? 

Debt in itself is not a problem, but unless you are paying higher rate tax, that is probably too much to get a mortgage with.