Moving house - old debt advise.

Whererainbowsend

Hi
we are currently thinking of moving house but we have some old debts that we are still paying off. They are no longer in our credit files but we are still paying them by DD each month. 

I just wondered if this will go against us on our new mortgage application. Would they want to know how much we owe on each one and would that impact what we could borrow? 

Thanks in advance 

ACG

It is more the monthly repayments that affects how much you can get rather than the balances, but yes they want to know about your commitments - that includes things not on your credit report such as these old debts, childcare, student loans etc. 

I have had applications go through where there are payments to people like moorcroft etc. The underwriter knew what they were, they asked about them (to ensure it had been declared correctly) and were ok with it. I cant answer for sure, but I reckon some lenders might get a bit fussy about it. Although some lenders may not even ask for bank statements. 

Whererainbowsend

Thank you I never thought to declare them when I went through the application with L&C but we’ve only got a mortgage in principle so far so hopefully I can just update it with them.
we pay around £160 per month for them combined and have been paying back at this rate for a few years. 

Just worried we won’t be able to get a mortgage because if this. I was hoping to get a mainstream mortgage as we are currently not with one and our interest rate is 10% at the moment! 

ACG

I can only think of one similar case I have done and that went through on the high street. 

Whererainbowsend

Oh that sounds promising thank you for your help. 

Not sure if you know this but If L&C can’t help us with a mortgage does that mean we’ve no chance getting one at all? 

kingstreet

L&C only does an affordability check, not a credit-searched agreement in principle. If you didn't tell them about these payments they haven't been taken into account in calculating your borrowing power.

Whererainbowsend

kingstreet said:

L&C only does an affordability check, not a credit-searched agreement in principle. If you didn't tell them about these payments they haven't been taken into account in calculating your borrowing power.

Oh is that all they do? So even though I’ve got an agreement in principle it’s not really worth anything? They said they can’t look at getting us a mortgage until we’ve had an offer accepted on the house we want to buy but I don’t want to put an offer in unless I know we can get a mortgage. Is that always the case? I’m worried about putting ours up for sale then not getting a mortgage and it’s wasted everyone’s time. It’s like catch 22 

kingstreet

I suspect L&C limits the work it does early because it knows a lot will be "picked-off" by estate agents and other brokers later in the process. You may wish to work with a smaller broker who will be anxious to ensure you have a fully scored DIP before proceeding too far on the sale/purchase road.

Whererainbowsend

kingstreet said:

I suspect L&C limits the work it does early because it knows a lot will be "picked-off" by estate agents and other brokers later in the process. You may wish to work with a smaller broker who will be anxious to ensure you have a fully scored DIP before proceeding too far on the sale/purchase road.

Ahh that makes sense about L&C

Is a DIP an approved mortgage offer? Or do I still need to have a sale agreed before I fully find out?
any ideas how I find a good smaller broker and do they charge a fee? 

Sorry for all the questions!  We bought our current house many years ago as first time buyers so this is all new to us

kingstreet

A decision in principle will have been credit checked/scored. It's very unusual to be declined after a DIP accept. You won't be able to submit a full application until you have an agreed sale and purchase. Ask friends and relatives for a recommendation. Some do, some don't. You need to research.

Whererainbowsend

Thank you I’ll look into it.