Mortgage in Principle - low and will I get it ?

FrancisBegbie

Hi 

I have a £185k deposit gift that I can’t use for anything else but a deposit 

I have £18k of secret credit card debt that I need to address myself - it’s currently interest free

I got accepted for a mortgage in principle off two lenders for £100k - low as I’m on £45k but in a sales job with a bonus - apparently that isn’t good for mortgages 

My question is 

Why so low and will I definitely get a mortgage agreed in principle?

worst case scenario is the mortgage gets rejected and I have to declare this debt and get in a LOT of family trouble 

worried 

david29dpo

Why 2 threads?

Exodi

Bonuses aren't a problem if they're consistent.

The problem is lenders will naturally be wary of someone on £45k plus a bonus, who is seemingly unable to clear £18k of credit card debt before applying for a mortgage.

I'd imagine if you had no debt when you applied, they'd likely offer you over £200k.

The optics aren't great - really you need to get to the root of this problem before considering buying a house (that unless the debt is for an emergency, you are spending more than you are earning). The interest rate offers won't last forever and 24.9% APR on that debt will be crippling.

born_again

https://forums.moneysavingexpert.com/discussion/6623200/mortgage-and-credit-cards#latest

FrancisBegbie

Exodi said:

Bonuses aren't a problem if they're consistent.

The problem is lenders will naturally be wary of someone on £45k plus a bonus, who is seemingly unable to clear £18k of credit card debt before applying for a mortgage.

I'd imagine if you had no debt when you applied, they'd likely offer you over £200k.

The optics aren't great - really you need to get to the root of this problem before considering buying a house (that unless the debt is for an emergency, you are spending more than you are earning). The interest rate offers won't last forever and 24.9% APR on that debt will be crippling.

Yes so surely I should shift the debt now to another interest free card and pay it off interest free ?

the interest free period is up until summer 2026

should I shift it now ?

ACG

Difficult to say why the AIP is so low as a fair bit more information is needed.

£18,000 from a lenders perspective is £540 pm (3% of the balance). That will be a factor. 
£45k is that basic or is that included your bonus? If it is basic term could be a factor. If it includes bonus, then it could be a number of things:
1) You do not have enough history,
2) Your bonus is paid in a way the lender does not like (ie quarterly or annually rather than monthly for example),
3) You have just chosen the wrong lender. 
4) Your age/dependents could be affecting the maximum. 

Its probably worth speaking to a broker. There are a lot of different potential factors but it will take someone going through it all to work it out. Chances are they will spot it within a couple of minutes if they are experienced. 

kingstreet

Lenders typically take a bonus averaged over the latest two years if increasing. Based on latest year, if lower.

Some lenders tax affordability for credit card debt by 5%, others by 3%. This will make a difference.

Your choice of lender is going to impact your options. Get broker help before you do anything else.

FrancisBegbie

Im fine with the £100k mortgage in principle offer 

that’s all I need literally £100k so that’s fine 

my questions are - shall I transfer the credit card debt to interest free somewhere else and extend my interest free time so I can continue to pay it off ?

will I get approved of a mortgage in principle - is that guranteeed?

kimwp

I personally wouldn't be adding searches to your credit file while you are trying to get a mortgage.

FrancisBegbie

kimwp said:

I personally wouldn't be adding searches to your credit file while you are trying to get a mortgage.

So shift the balances when I have the mortgage and I’ve moved in ?

ACG

FrancisBegbie said:

Im fine with the £100k mortgage in principle offer 

that’s all I need literally £100k so that’s fine 

my questions are - shall I transfer the credit card debt to interest free somewhere else and extend my interest free time so I can continue to pay it off ?

will I get approved of a mortgage in principle - is that guranteeed?

Nothing is guaranteed, but if you have entered everything as the lender would want you to then affordability should not chance. But the underwriter still has to assess your application as a whole. That might mean going through bank statements, payslips etc.