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What better for securing a mortgage being debt free or having a good deposit
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Rchshrk
Posts: 1 Newbie
My current financial situation is I have approx 15k outstanding on personal loans and around 10k of credit cards between me and my wife. Because of this our credit isn't great (it's not bad it's just we have a fairly high debt to income ratio). We recently came into some money 50k and area looking at buying our first house. Although we have high debt we are not in arrears from the view point of securing a mortgage are we best off saving the bulk of the 50k for a deposit or completely clearing our debts and having a 20-25k deposit bearing in mind with our debts cleared we will be able to save a fair bit of additional cash and we are not looking to buy until my daughter leaves school next June?
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Rchshrk said:My current financial situation is I have approx 15k outstanding on personal loans and around 10k of credit cards between me and my wife. Because of this our credit isn't great (it's not bad it's just we have a fairly high debt to income ratio). We recently came into some money 50k and area looking at buying our first house. Although we have high debt we are not in arrears from the view point of securing a mortgage are we best off saving the bulk of the 50k for a deposit or completely clearing our debts and having a 20-25k deposit bearing in mind with our debts cleared we will be able to save a fair bit of additional cash and we are not looking to buy until my daughter leaves school next June?Credit cards: £9,705.31 | Loans: £4,419.39 | Student Loan (Plan 1): £11,301.00 | Total: £25,425.70Debt-free target: 21-Feb-2027
Debt-free diary2 -
annetheman said:Rchshrk said:My current financial situation is I have approx 15k outstanding on personal loans and around 10k of credit cards between me and my wife. Because of this our credit isn't great (it's not bad it's just we have a fairly high debt to income ratio). We recently came into some money 50k and area looking at buying our first house. Although we have high debt we are not in arrears from the view point of securing a mortgage are we best off saving the bulk of the 50k for a deposit or completely clearing our debts and having a 20-25k deposit bearing in mind with our debts cleared we will be able to save a fair bit of additional cash and we are not looking to buy until my daughter leaves school next June?MFW 2025 #50: £1139.75/£600007/03/25: Mortgage: £67,000.00
12/06/25: Mortgage: £65,000.00
18/01/25: Mortgage: £68,500.14
27/12/24: Mortgage: £69,278.38
27/12/24: Debt: £0 🥳😁
27/12/24: Savings: £12,000
07/03/25: Savings: £16,5001 -
If you are income/affordability rich, keep the higher deposit and lower loan to value.
If you are income/affordability poor repay some/all of the credit to improve your borrowing potential.
Above all, get professional advice before doing anything.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.3 -
It’s not about more deposit or savings to secure the mortgage. It’s down to the fact that how much you earn, what’s your price bracket for property that you are buying and then you need to check your LTV and decide how much deposit you would need and place yourself accordingly.
It’s possible that you can keep all your existing debt if you suffice the requirement of meeting the required LTV and affordability.1 -
Rchshrk said:My current financial situation is I have approx 15k outstanding on personal loans and around 10k of credit cards between me and my wife. Because of this our credit isn't great (it's not bad it's just we have a fairly high debt to income ratio). We recently came into some money 50k and area looking at buying our first house. Although we have high debt we are not in arrears from the view point of securing a mortgage are we best off saving the bulk of the 50k for a deposit or completely clearing our debts and having a 20-25k deposit bearing in mind with our debts cleared we will be able to save a fair bit of additional cash and we are not looking to buy until my daughter leaves school next June?I’m a Forum Ambassador and I support the Forum Team on the Debt free Wannabe, Budgeting and Banking and Savings and Investment boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
The 365 Day 1p Challenge 2025 #1 £667.95/£301.35
Save £12k in 2025 #1 £12000/£80000
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