Moving home with debt

mallen

Hi,

I am looking to sell my current house which I am the sole person on the mortgage and buy another property with my wife. Since taking out the mortgage I have a couple of credit cards and loans which I pay monthly and have never missed a payment. I believe my credit rating is very high. 1000 Clearscore 999 Experian.

I have around £100k equity and around £25k in loans and £10k in credit cards. 

My question is when looking to buy another house is there a way around the "do you have loan/cc debt" questions if I intend to use the equity from the sale to pay the debt off?
Would a sit down with my banks mortgage advisor be enough to sort this? My other option would be to borrow the £35k from a parent/grandparent pay the debt off sell the house and repay them. I would rather avoid this method and sort it myself...

ACG

Every lender will ask about the debt and whether it will remain or not. 
A handful of lenders will count the debt as remaining even if you tick the box to say it will be cleared. 
Some lenders may decline you outright because of the amount of debt if it is a high proportion of your income (around 40-50%). 

There are lenders who you would actively need to avoid, most lenders however it would just be down to how your application as a whole scores. 

I think it would be worth using a broker. If you pick a lender at random, I would say the chances of you being ok are in your favour - maybe 60-70%. But there is still a decent chance you could come unstuck and be making a wasted application. Dont assume the banks advisor will know the difference as they may not, they may just want to try and hit targets etc (I have worked for 2 banks). 

RelievedSheff

You can still get a mortgage with loans and credit card debt it will just affect your affordability. 

No need to pay them off before applying for a mortgage unless they are adversely affecting the affordability.

K_S

@mallen I'll echo what ACG said above. What impact (if any) the background debt may have on your application depends on the specific numbers - how much you're looking to borrow, LTV, income, etc.

If the size of the debt is impacting your affordability then you can always go with a lender that will disregard debt being repaid from equity.

If the size of the debt is large with respect to your income then it can get a bit more tricky to pass the lender 'credit-scoring' (nothing to do with your Experian/Equifax/Transunion credit score) but should not be insurmountable.

As ACG said, I would recommend considering using a broker. The MSE guide here can help you find one
https://www.moneysavingexpert.com/mortgages/best-mortgages-cashback/#step3