Mortgage with credit card debt - possible?

aldino2015

Hi, first time buyer here.
My situation is I currently have around £20k to pay back on various credit cards. Credit utilisation is around 66% as I have roughly £30k credit available. I have already closed unused credit card accounts that I had previously. I have signed up to the MSE Credit Club and it shows score of 820/999.
My current pre tax salary is £52k, with overtime it can reach nearly £60k. From my rough £3k after tax take home monthly pay, I put at least £1.5k towards the credit cards, with any extra o/t towards it too. I am living at home with family and my total personal costs are roughly £1250/m, none of which are loans or any type of finance etc. I have no current savings. Total interest on my debt every month is around £200.
My original plan was to wait until everything is paid off (hopefully within 12 months) then wait another 6 months or so to save up for a deposit then move out.
Due to recent changes in circumstances, I am now looking to move out within the next 6 months instead. This gives me a problem as I do not currently have any deposit saved, and will not pay off all my cards by then. I am not looking to move out and rent. I need to 'own' my own space. Saying that, the only realistic purchase option I currently have, is using Shared Ownership, as I want to stay in West London for various reasons.

Looking at potential figures, a £400k property seems to be the average, with 25% ownership so £100k coming with a £5k-£10k deposit required. This would be possible, if for the next 6 months I only paid the minimum on the cc's and put that £1.5k-£2k to the side for a deposit. 50% ownership increases the requirements.

After all this typing, my question is am I likely to actually get a mortgage in 6 months with my current situation (as it wouldn't change figure wise)? I did run a mortgage calculator on Natwest (my main bank) and surprisingly even after declaring £20k of credit card debt it said they could still offer me a £230k mortgage... but this was just an automatic calculator.

Any thoughts or advice appreciated, thank you.

K_S

@aldino2015 Take an example of an actual SO property (make sure to note the monthly rent and service charges as well) and put in your numbers in the Leeds affordability calc here (making sure to select the SO option) and see what you get. https://www.leedsbuildingsociety.co.uk/intermediaries/affordability-calculator/

RelievedSheff

You don't have to clear all of your credit card debt to get approved for a mortgage. It will just affect your affordability and the amount that they will lend to you.

We have a very similar level of credit card debt to you and were recently approved for a mortgage with the Halifax for the amount that we needed.

ACG

Having debt in itself is not a problem. It only becomes a problem if you are paying late/missing payments. 
I do not do shared ownership so not the best to advise but your income would seem to suggest you can afford way more than £100k Mortgage (probably more like £200k) but obviously with rent to pay on the other half that will likely bring that down. The major limiting factor will obviously be the deposit 

There is probably no harm speaking to a broker who knows what they are doing with this type of mortgage. 

aldino2015

K_S said:

@aldino2015 Take an example of an actual SO property (make sure to note the monthly rent and service charges as well) and put in your numbers in the Leeds affordability calc here (making sure to select the SO option) and see what you get.

Says £160k.. which is more than enough. Figure seems to depend a lot on the 'other monthly commitments' figure. Without the £20k cc debt shows £235k (just out of curiosity).

RelievedSheff said:

You don't have to clear all of your credit card debt to get approved for a mortgage. It will just affect your affordability and the amount that they will lend to you.

We have a very similar level of credit card debt to you and were recently approved for a mortgage with the Halifax for the amount that we needed.

It's a shame I didn't realise this earlier, I always figured I had to clear the debt first. I had savings last year but used it all to help pay the cards. Now I'm scrambling to save up as much as possible for a few months to have enough for a small deposit.
ACG said:

Having debt in itself is not a problem. It only becomes a problem if you are paying late/missing payments. 
I do not do shared ownership so not the best to advise but your income would seem to suggest you can afford way more than £100k Mortgage (probably more like £200k) but obviously with rent to pay on the other half that will likely bring that down. The major limiting factor will obviously be the deposit 

There is probably no harm speaking to a broker who knows what they are doing with this type of mortgage. 

Never had any late/missed payments. Yes the deposit is the limiting factor indeed if buying a property outright. I could also definitely get more than 25% equity in a shared ownership property but that would increase the overall monthly cost, which would be manageable, but would limit the amount I can pay every month to bring the cc debt down.

Thanks for all of your replies, it's definitely helped. I think my plan now is to pay minimum on the cc for the next 4/5 months, minimise all spending, and put £2k/m to the side so hopefully have £8k-£10k for the deposit. Question is exactly how much % share to purchase, which I will need to do some calculations for and see what would be most affordable, and also allow me to being the cc debt down at the same time.

boxer234

I am in a similar situation that’s interesting to know you can get a mortgage with credit debt.  Should I throw money at my deposit fund instead ? 

MFWannabe

aldino2015 said:

K_S said:

@aldino2015 Take an example of an actual SO property (make sure to note the monthly rent and service charges as well) and put in your numbers in the Leeds affordability calc here (making sure to select the SO option) and see what you get.

Says £160k.. which is more than enough. Figure seems to depend a lot on the 'other monthly commitments' figure. Without the £20k cc debt shows £235k (just out of curiosity).

RelievedSheff said:

You don't have to clear all of your credit card debt to get approved for a mortgage. It will just affect your affordability and the amount that they will lend to you.

We have a very similar level of credit card debt to you and were recently approved for a mortgage with the Halifax for the amount that we needed.

It's a shame I didn't realise this earlier, I always figured I had to clear the debt first. I had savings last year but used it all to help pay the cards. Now I'm scrambling to save up as much as possible for a few months to have enough for a small deposit.
ACG said:

Having debt in itself is not a problem. It only becomes a problem if you are paying late/missing payments. 
I do not do shared ownership so not the best to advise but your income would seem to suggest you can afford way more than £100k Mortgage (probably more like £200k) but obviously with rent to pay on the other half that will likely bring that down. The major limiting factor will obviously be the deposit 

There is probably no harm speaking to a broker who knows what they are doing with this type of mortgage. 

Never had any late/missed payments. Yes the deposit is the limiting factor indeed if buying a property outright. I could also definitely get more than 25% equity in a shared ownership property but that would increase the overall monthly cost, which would be manageable, but would limit the amount I can pay every month to bring the cc debt down.

Thanks for all of your replies, it's definitely helped. I think my plan now is to pay minimum on the cc for the next 4/5 months, minimise all spending, and put £2k/m to the side so hopefully have £8k-£10k for the deposit. Question is exactly how much % share to purchase, which I will need to do some calculations for and see what would be most affordable, and also allow me to being the cc debt down at the same time.

aldino2015 said:

K_S said:

@aldino2015 Take an example of an actual SO property (make sure to note the monthly rent and service charges as well) and put in your numbers in the Leeds affordability calc here (making sure to select the SO option) and see what you get.

Says £160k.. which is more than enough. Figure seems to depend a lot on the 'other monthly commitments' figure. Without the £20k cc debt shows £235k (just out of curiosity).

RelievedSheff said:

You don't have to clear all of your credit card debt to get approved for a mortgage. It will just affect your affordability and the amount that they will lend to you.

We have a very similar level of credit card debt to you and were recently approved for a mortgage with the Halifax for the amount that we needed.

It's a shame I didn't realise this earlier, I always figured I had to clear the debt first. I had savings last year but used it all to help pay the cards. Now I'm scrambling to save up as much as possible for a few months to have enough for a small deposit.
ACG said:

Having debt in itself is not a problem. It only becomes a problem if you are paying late/missing payments. 
I do not do shared ownership so not the best to advise but your income would seem to suggest you can afford way more than £100k Mortgage (probably more like £200k) but obviously with rent to pay on the other half that will likely bring that down. The major limiting factor will obviously be the deposit 

There is probably no harm speaking to a broker who knows what they are doing with this type of mortgage. 

Never had any late/missed payments. Yes the deposit is the limiting factor indeed if buying a property outright. I could also definitely get more than 25% equity in a shared ownership property but that would increase the overall monthly cost, which would be manageable, but would limit the amount I can pay every month to bring the cc debt down.

Thanks for all of your replies, it's definitely helped. I think my plan now is to pay minimum on the cc for the next 4/5 months, minimise all spending, and put £2k/m to the side so hopefully have £8k-£10k for the deposit. Question is exactly how much % share to purchase, which I will need to do some calculations for and see what would be most affordable, and also allow me to being the cc debt down at the same time.

FYI It’s always best to pay over the min payment; even if it’s just slightly over