Getting a mortgage in principle

Haryharrison

Hi everyone don't judge.
So me and my partner are wanting to move to a bigger property due to our expanding family. Our mortgage is up in September. We currently have 225k equity if the house sells for the valuation price if not let's say 200k. Me and my partner have built up debts of around 70k from the covid era of lost hours and pay and my redundancy, and with the cost of living now we are unable to get these down drastically. We are wanting to find a lender who will disregard to debt which is to be paid in full on completion from the equity of our house sale. With all other legal costs and expenses taken out this will still leave us with a deposit of between 100-125k mine and my partner have excellent credit reports no missed payments or defaults, with a combine salary of around 75k. My question is, is it possible to find a lender that will disregard the debt which is to be paid in full on completion or is this a myth?

kingstreet

Yes. More lenders will ignore it than will take it into account. Avoid Santander and Platform/Co-op and for best lender/product advice seek broker assistance.

FlorayG

I don't see why they would not. When you sell you will pay off the debt so in effect they will be loaning money to a person who doesn't HAVE any debts  - they're not loaning you the money NOW

Haryharrison

Thank you, we're just a little disheartened at the moment as we've had a mortgage in principle declined. We didn't think it would be an issue with debts to be paid in full. We've only managed to get into the position we're in due to covid. So we're not likely to fall into that position in the future.

No19v87

Are you up to date on all payments or do you have missed payments and/or defaults on any of the debts?

ACG

There are 2 parts to this...
1) Lenders who will ignore the debts for affordability purposes. As kingstreet says, there are only a few who will work on worst case scenario. I think there are one or 2 others but those are the biggest lenders. 
2) Lenders who are ok with you having built up the debt in the first place. This can be quite complex or simple depending on the numbers. Some lenders have a "debt to income ratio" they use, if you go over whatever that figure is, its an automatic decline. Other lenders might decline it at underwriters discretion and other lenders it may just result in a score decline. However, there are lenders who are more open to debt in the background. If you are using 99% of your available allowance, that is likely to be looked at more harshly than if you are at 70%. If you are using £6,999 of a £7,000 limit - that would look worse than if you were using £7,500 as a £10,000 limit - even though the debt is higher in the second example. 

Long story short... speak to a broker. There should be options. 

Haryharrison

No19v87 said:

Are you up to date on all payments or do you have missed payments and/or defaults on any of the debts?

No we have no missed payments or any defaults or ever have. Everything is up to date, we just got are self into a sticky situation from covid time and me losing my job. Which has just built up.