Conditional mortgage - clearing debt from house sale proceeds

everypennytowardsfire

Apologies if this has been asked before/recently but I was wondering if there were any lenders in the market that would consider giving a conditional mortgage offer to someone with a high total credit card balance, with the view of most of that balance being paid of as part of the house buying process.

Basically, my current total debt is around £40K and I already own a house (with a mortgage), which I'd be looking to sell before moving to another property. I'm hoping for some of that debt to be paid off before I apply for a new mortgage but in all likelihood at least £30K would still be outstanding. I know that I wouldn't meet affordability criteria with my current salary, taking that balance as well as the likely price of the new house into account. So what I would like to do is to repay all or most of the remaining balance with the proceeds from selling my current house, but I would like to avoid having to sell first, move into temporary rented accommodation, clear the credit card balance, wait for my records to get updated with all the credit agencies, and then buy a new house. I'd love to be able to do it as part of one connected transaction (of selling and buying at the same time), if possible.

So I was just wondering if that is something that some lenders would consider - a conditional mortgage stipulating that the credit card balance would need to be paid off as part of the transaction, but without insisting that it happens before I buy my new house. If so, does anyone know of any specific lenders that would entertain this?

I am planning to speak to a broker soon but it would be really helpful to know if that's even a possibility or whether the reality is that I will have to wait until I've repaid most of the debt (without being able to use the equity from my current house) before I can think of moving (unless I'm prepared to go into rented etc).

Any thoughts/suggestions would be greatly appreciated. Thank you!

ACG

There are a fair few lenders who will do this. Some are better at it then others, but normal rates should be achievable.

On your mortgage offer, it will have a section called special conditions - there it will list your cards/loans which will need to be repaid.

everypennytowardsfire

Perfect, thank you. That gives me hope as I'd really like to move as soon as possible. Great to know about the rates too.

everypennytowardsfire

@ACG do you happen to know if Nationwide would do this? They are my current lender and I've generally been happy with the mortgage terms etc. I wouldn't mind staying with them if possible, depending on what's available when I'm ready to apply.

RelievedSheff

We had a similar stipulation on our recent mortgage offer with the Halifax.

We had said that we would repay £10k credit card balance on completion when we applied and they put that as a condition of the mortgage offer.

ACG

https://forums.moneysavingexpert.com/discussion/comment/82063549#Comment_82063549

Nationwide are very quirky with debt.

A lot will depend on your balances as a percentage of the limits.

If you have £40k worth of credit cards and limits of £60k, you might be ok (depending on your income). If you have balances of £40k but limits of £45k then they are less likely to do it.

But a lot will come down to the LTV, your income etc. Being a current customer may help. But if you were not with them, I am not sure they would be my first choice.

Hows that for sitting on the fence 🤣

kingstreet

Nationwide debt criteria;-

Unsecured debts

Clients intending to pay off unsecured debt, that has more than six months to run, may be asked to provide proof that the debt has been paid off in full. This is before we can proceed to offer.

Examples of acceptable proofs we may require include:

• A credit card statement showing that the balance has been cleared
• A document from a loan company confirming the loan has been paid off

Where you're clearing more than one unsecured debt, we’ll need proof of repayment for each sole debt. Screenshots are acceptable.

We may accept if the unsecured debt is being repaid with equity from the sale of the client’s main residence.

everypennytowardsfire

Thanks everyone, that's all really helpful to know.

If anyone else has any experience of this with other lenders, or any tips, please feel free to share.