Getting a mortgage with debt

Wardee

Hi all, I've finally decided I want to get onto the property ladder (I'll be 38 next year) and just after a bit of general advise you may be able to assist with. I'm hoping to continue saving but I do have a loan which will be down to £8300 by next year (if I don't overpay at all) when I plan to have saved enough to seriously look at getting a mortgage on the current trend. I know the best way is paying off debt first but I don't want to waste another year paying down my debt as it is finally at a point where it's a low enough payment not to interfere too much with my monthly budgeting. 

So will this debt be too high to even consider getting a mortgage for someone on ~£25k year or is it totally dependent on other factors? I'm just weighing up my options before speaking to someone about mortgages and potentially wasting their time. Thank you for any advice.

dimbo61

So you income is £25K a year before Tax at 20% and National insurance at 13.25% and Pension at least 4%
So how much is take home pay ?
Yes £8300 + is alot of Debt for someone in £25K a year. 

Wardee

Like I say just weighing up my options. Basic I'll come out with just under £1600 per month. I've scrimped and struggled over the last few years and got my living expenses down as low as I can. My original debt reached its peak at £23k in 2019 so I'm just looking for some glimmer of hope at the end that it's all been worth it. Yes I could plough all my cash into the debt to wipe it clean this year but I was just after some general advice if anyone had been in a similar boat and what they chose to do. 

FutureMortgageSeeker

dimbo61 said:

So you income is £25K a year before Tax at 20% and National insurance at 13.25% and Pension at least 4%
So how much is take home pay ?
Yes £8300 + is alot of Debt for someone in £25K a year. 

That's wasn't the question asked, was it? Particularly given you have no knowledge of the background or circumstances. I was always under the impression that if people cannot say something constructive, they should keep quiet.

To the OP, I would recommend playing around with some of the online mortgage affordability calculators - that will give you an idea of where you stand. 

Thrugelmir

Wardee said:

I know the best way is paying off debt first but I don't want to waste another year paying down my debt as it is finally at a point where it's a low enough payment not to interfere too much with my monthly budgeting. 

Be far from wasted if interest rates rise in the future. Debt is debt 

dimbo61

So well done on reducing your debts.
Are you a first time buyer ?
Save into a LISA ? 25% government bonus upto £1000 each tax year.
No point in saying Yes everything will be fine with £8,000+ debt and only £25,000 income.
Live the MSE way and spend your income wisely.
Your on the right website and we are all here to help where possible.

Wardee

FutureMortgageSeeker said:

To the OP, I would recommend playing around with some of the online mortgage affordability calculators - that will give you an idea of where you stand. 

Thanks, I will do that but from the answers so far it seems I shouldn't really bother. Maybe I was a bit too optimistic and should focus on being debt free as a priority. 

Thrugelmir said:

Be far from wasted if interest rates rise in the future. Debt is debt 

Probably a bad way for me to word it but I meant having to start saving again a year or 2 down the line albeit with zero debt but then we are looking at 2 or 3 years before getting on the ladder.

dimbo61 said:

So well done on reducing your debts.
Are you a first time buyer ?
Save into a LISA ? 25% government bonus upto £1000 each tax year.
No point in saying Yes everything will be fine with £8,000+ debt and only £25,000 income.
Live the MSE way and spend your income wisely.
Your on the right website and we are all here to help where possible.

Thank you, it's been a very difficult few years but the debt took a lot longer to pile up so I am happy with the overall progress. Unfortunately I have had a mortgage 15 or so years ago so the LISA is redundant for me which is a huge shame as that would have been perfect.

Like I said I just wanted to gauge some positive opinions on the subject but looks like I haven't really managed that so it's probably a better idea to forget it and pay off the debt or get it to a much more reasonable figure at least first. 

Appreciate all taking the time to comment

SavingPennies_2

Wardee said:

Hi all, I've finally decided I want to get onto the property ladder (I'll be 38 next year) and just after a bit of general advise you may be able to assist with. I'm hoping to continue saving but I do have a loan which will be down to £8300 by next year (if I don't overpay at all) when I plan to have saved enough to seriously look at getting a mortgage on the current trend. I know the best way is paying off debt first but I don't want to waste another year paying down my debt as it is finally at a point where it's a low enough payment not to interfere too much with my monthly budgeting. 

So will this debt be too high to even consider getting a mortgage for someone on ~£25k year or is it totally dependent on other factors? I'm just weighing up my options before speaking to someone about mortgages and potentially wasting their time. Thank you for any advice.

Don't worry about wasting their time, they are getting paid. I think it might be a struggle unless you are looking to buy a cheap property but no harm in asking, at least you will know either way and can plan your next move. Well done on getting rid of so much debt by the way.

SuseOrm

How much are you looking to borrow that’s the key here ?  What kind of property are you expecting you’ll be able to buy for 4×25 grand plus what sort of deposit do you have to put down if you don’t clear the debt ? 

Wardee

SavingPennies_2 said:

Don't worry about wasting their time, they are getting paid. I think it might be a struggle unless you are looking to buy a cheap property but no harm in asking, at least you will know either way and can plan your next move. Well done on getting rid of so much debt by the way.

Yes it would only be a cheapish property to start with and get on the ladder initially. Thanks for the kind words, it's been a horrible few years that has totally opened my eyes up to debt, finances and budgeting. I would be nowhere without YNAB, big advocate of it. I have learned to live very frugally over the past few years though! It's only the last few months I've actually felt free, even with this debt. I can't even begin to imagine what it'll feel like once that's gone too!

SuseOrm said:

How much are you looking to borrow that’s the key here ?  What kind of property are you expecting you’ll be able to buy for 4×25 grand plus what sort of deposit do you have to put down if you don’t clear the debt ? 

Possibly 100k-125k? I know all circumstances are different but that was the reason for the OP, just to see if anyone has been in a similar position before or if I am just out of my depths at the moment. I have worked out that I could possibly save up a deposit of £10k-15k by the end of the year. Obviously this is the perfect scenario.

That was originally my plan with getting this loan, to pay it off within 12 months and be free of debt. My mind ticked over and thought if I could get on the property ladder first then focus on the debt the year after, I could put actually put myself in a better position?