Mortgage application & existing debt

Jimmerp85

Hi everyone just after some advice and guidance.

So I’ve been in debt since about 2021… I have a long history of loans often used to consolidate each other and other pockets of debt we managed to get during this period . (9 loans in the last 6 years) all of these were paid on time with no missed payments and my credit rating is excellent on all 3 sites.

Back story is we had young children my wife worked in a junior role, child care and I had to retrain in my career during this period and took a substantial pay cut in doing so. Skip forward 5 years kids are older (and we now earn a comfortable £107k a year combined.

What is left though is 20k ish of debt. I consolidated this in October 25 with natwest for 4 years at a monthly payment of £582 and Interest rate is 13% . Nationwide have offered me a loan which would clear all this but over 5 years and a payment of £420 a month and interest rate of 5% so even though it’s paid over 5 years instead of 4 I’m still paying less overall.

We want to buy a house in about 12-18 months and with our salary we can afford to save a healthy amount and pay this off quietly in the background. Would one more consolidation loan likely kill my application with my already chequered history of lots of Loans ? Am I better to keep it the way I’m going , save money and just make things look stable ? Am I panicking about nothing ?

Any help would be appreciated , sorry it’s a long one !!

Woodstok2000

What are the early repayment costs of the current loan?

Jimmerp85

https://forums.moneysavingexpert.com/discussion/comment/81859286#Comment_81859286

It’s just over £500 to pay it off early

ProcessMatters

With a £500 early repayment charge, the Nationwide loan still looks cheaper overall, but from a mortgage point of view stability matters more than optimisation. One more consolidation close to application won’t “kill” things, but lenders prefer to see fewer recent credit changes. If buying in 12–18 months, keeping the current loan, overpaying it, and building savings can look cleaner on paper.

Jimmerp85

https://forums.moneysavingexpert.com/discussion/comment/81859437#Comment_81859437

thank you - I kind of had it in my head a lower monthly payment while saving me more in the long run would possibly look more attractive when applying- I was planning to use the money saved as an additional buffer for if things went wrong we weren reaching for the house savings pot .

It’s our dream to finally become homeowners I just don’t want the past to ruin it and want to tackle this debt in best way possible

Altior

Depends on the lender but you can often almost pay off a loan without attracting early settlement fees. For example pay £9600 of an outstanding balance of £10K. Leaving one or two final contractual payments to clear the account.

Jimmerp85

https://forums.moneysavingexpert.com/discussion/comment/81860010#Comment_81860010

I did wonder if that may be an option . The lender is Natwest

Altior

https://forums.moneysavingexpert.com/discussion/comment/81860075#Comment_81860075

Looks like you can use this tool to find out Additional Payment Illustration

Jimmerp85

https://forums.moneysavingexpert.com/discussion/comment/81860135#Comment_81860135

thank you ! I already make token overpayments by just transferring it from my nationwide account - will fill

Out the form and see how it goes