Selling property for mortgage deposit and clear debt

Mrp791

I was left a property in an inheritance , it’s currently being sold and the plan is to use £160k as a deposit on a home and £30k to pay all debts off and solicitors fees.

Now we’ve put an offer in and had an aip. Thing is we’ll need to pay our debt from the sale of the property to give us the best chance of getting the mortgage . How will this work with us getting an offer of a mortgage. Do we wait until the property we have for sale has all gone through and pay debt off or can we explain when we go for the mortgage it will be paid off with the sale of our property. Hope this makes sense

Brie

The bank may be happy to give you a mortgage if they can see that there's enough income to support both that and the debt.  They cannot assume that you will use the sale of the previous house to clear the debt as they only have your word that's what you intend.  This is assuming that the debt is something separate from the sale of the property.

ACG

You need to be careful with this. 
Most lenders (not all), will ignore the debt if it is cleared by completion. Some will not ignore it if it is on your credit report at the time of application - even if you paid it off yesterday and have proof of payment! 

You either need to check with the lender upfront, or use a broker. 

JustMe18

I am having exactly the same -  we are selling and I am using my sale as deposit and paying off all my debts. i have this as a special condition on my offer, that I need to pay off those debts within 30 days after completion. 

JustMe18

Brie said:

The bank may be happy to give you a mortgage if they can see that there's enough income to support both that and the debt.  They cannot assume that you will use the sale of the previous house to clear the debt as they only have your word that's what you intend.  This is assuming that the debt is something separate from the sale of the property.

They can. Our affordability is based on this, I put comment above, but basically lender is only giving us an offer, assuming we will pay all our debt off after completion ( around £20k)

Mrp791

JustMe18 said:

I am having exactly the same -  we are selling and I am using my sale as deposit and paying off all my debts. i have this as a special condition on my offer, that I need to pay off those debts within 30 days after completion. 

Who if you don’t mind me asking we’re you getting a mortgage through?