About to apply for mortgage but credit card debt

Lilsycamore

Hi

Both FTB with combined salary of 100k. We have a DIP above the value of the property we are looking to purchase. 

I have around 10k of credit card debt (near limit) and 10k loan. My partner has 10k loan also. 

What are the chances of being asked to pay down the credit card before a mortgage approval? Given we already have a DIP? 

My credit cards are on interest and haven't switched to 0% to get them paid down faster as we are about to apply for the mortgage. But in doing that I've barely made a dent the last few months. 
 
I'm worried the mortgage application will ask me to reduce the amounts owing which I'll struggle with as all money saved is needed for the deposit, LTT and fees. 

And if I try and switch now to get 0% or possibly a loan to consolidate them I assume that looks possibly more negative to a lender? 

I'd really welcome any advice from someone more experienced here. 

Thanks 

Leigh

Thrugelmir

Lilsycamore said:

Hi

Both FTB with combined salary of 100k. We have a DIP above the value of the property we are looking to purchase. 

I have around 10k of credit card debt (near limit) and 10k loan. My partner has 10k loan also. 

What are the chances of being asked to pay down the credit card before a mortgage approval? Given we already have a DIP? 

My credit cards are on interest and haven't switched to 0% to get them paid down faster as we are about to apply for the mortgage. But in doing that I've barely made a dent the last few months. 
 
I'm worried the mortgage application will ask me to reduce the amounts owing which I'll struggle with as all money saved is needed for the deposit, LTT and fees. 

And if I try and switch now to get 0% or possibly a loan to consolidate them I assume that looks possibly more negative to a lender? 

I'd really welcome any advice from someone more experienced here. 

Thanks 

Leigh

DIP is not a mortgage offer. 

PS. Makes no sense to have expensive debt while saving. If you are unable to make a dent anytime soon. Perhaps you need to work out where your £100k of income is being spent. 

Lilsycamore

Thanks. 

We have only lived together recently so up until last month was both paying out separate household costs. The plan was to buy next year but personal situations force us to try and move quicker hence switching to saving and paying debts slower than usual. 

Interested in any advice to my question if you have some. 

K_S

Lilsycamore said:

Hi

Both FTB with combined salary of 100k. We have a DIP above the value of the property we are looking to purchase. 

I have around 10k of credit card debt (near limit) and 10k loan. My partner has 10k loan also. 

What are the chances of being asked to pay down the credit card before a mortgage approval? Given we already have a DIP? 

My credit cards are on interest and haven't switched to 0% to get them paid down faster as we are about to apply for the mortgage. But in doing that I've barely made a dent the last few months. 
 
I'm worried the mortgage application will ask me to reduce the amounts owing which I'll struggle with as all money saved is needed for the deposit, LTT and fees. 

And if I try and switch now to get 0% or possibly a loan to consolidate them I assume that looks possibly more negative to a lender? 

I'd really welcome any advice from someone more experienced here. 

Thanks 

Leigh

@lislycamore Assuming that the DIP has been accurately keyed in and in line with the lender criteria, the background debt and outgoings have already been factored in when you got a DIP accept.

Lilsycamore

Thanks, that's reassuring. 

Confident everything has been keyed in correctly. Is it unusual that following the DIP when you are at the application stage they ask for reduction of debt? 

K_S

Lilsycamore said:

Thanks, that's reassuring. 

Confident everything has been keyed in correctly. Is it unusual that following the DIP when you are at the application stage they ask for reduction of debt? 

@lislycamore The underwriter reducing the loan amount accepted at the DIP stage can happen due to a number of different reasons, some of which are (not an exhaustive list) -
- DIP/full application being keyed incorrectly or not in accordance with lender criteria. 
- the lender system having a mismatch in the internal calculator used at DIP and full application stages (rare)
- the client being unable to adequately evidence (as per lender requirements) the affordability data input on the application.
- significant changes on credit file between DIP and full app
- I wouldn't expect it for a case where the debt is 30% of income, but some lender systems will 're-model' affordability or prompt a manual review of the credit files if there's excessive debt in the background, and that could also result in a change in borrowing figures.
- etc.

J_Wilko

If you have gone direct to a lender you may be in the dark for a while until full underwriting kicks in.

Most mortgage lenders factor in the credit you have for affordability purposes but each has different rules.

So what may be a problem for your current lender, may be ok for another.

Rule of thumb mortgage lenders don't much like debt consolidation.

Really you are in the territory where you need advice from a broker on how best to deal with the credit whilst also considering the best mortgage deal for you.

If that's a step too far. I am in this underwriting group on facebook. You can ask questions directly to mortgage underwriters. If you'd like to have a look, let me know. It may help.

Prichard

Lilsycamore said:

Hi

Both FTB with combined salary of 100k. We have a DIP above the value of the property we are looking to purchase. 

I have around 10k of credit card debt (near limit) and 10k loan. My partner has 10k loan also. 

What are the chances of being asked to pay down the credit card before a mortgage approval? Given we already have a DIP? 

My credit cards are on interest and haven't switched to 0% to get them paid down faster as we are about to apply for the mortgage. But in doing that I've barely made a dent the last few months. 
 
I'm worried the mortgage application will ask me to reduce the amounts owing which I'll struggle with as all money saved is needed for the deposit, LTT and fees. 

And if I try and switch now to get 0% or possibly a loan to consolidate them I assume that looks possibly more negative to a lender? 

I'd really welcome any advice from someone more experienced here. 

Thanks 

Leigh

Did you use a broker for the DIP and were you transparent about the credit cards? If so then then the broker should have put this to the lender. 

If you have always paid on time then it, in many ways, shows that you are a trustworthy borrower. 

You'll be fine.