Moving house with debt possible?

msfaye

we bought a house January 2022 with mortgage.
But over the last four years, we built up debt around £30k from renovation/house improvement and childcare costs. My partner’s been trying to pay it off, but mostly seem to be paying off the interests with the money left over each month.

We’re thinking of moving to another house for Childs education, so hoping to get a completion before 15 January 2027.

Our salary added up to around £120k, we will likely have to take out mortgage of £535k for the new house, but our monthly outgoing doesn’t look healthy with the debt and interest payments. We also won’t have cash available for the SDLT

I worry that we won’t be able to take out any mortgage in the next few months. Is there any way we can manage it?

Many thanks

ellenvan

Maybe post a SOA to give people a bit more detail, then you may get some pointers re cutbacks etc.

born_again

You are looking at the top end of lending with your income without any other debt.

Factors That Change Your Limit

• Monthly debt: Credit cards, loans, or car payments lower your borrowing power.
• Dependents: Children or high regular child care costs reduce the final loan offer.
• Deposit size: A larger deposit gives lenders more confidence to lend higher multiples.
• Bonus or commission: Lenders may only count a percentage of variable extra income.

RelievedSheff

With the scant detail you have provided I think you might be struggling to borrow the amount you want.

Having debt does not on its own stop you taking out a new mortgage but it does affect your affordability checks and reduce the amount you can borrow. As do other monthly commitments like dependants, car finance, etc.

If you dont have cash available to pay the costs associated with moving like estate agents fees, solicitors, stamp duty, etc. then this can be paid out of the equity in your current property but this does then reduce the amount you have to put down as a deposit on your new home.

fatbelly

Give us a bit more detail on the 30k debt. Whose name(s) is it in? Is it loan, credit card or something else? Are there any late payments or defaults showing on your credit files?

msfaye

Thanks for all the replies. A bit more detail / SOA below.

Background

• January 2022: completed on our current house for £530k, with a £115k deposit and £415k mortgage.
• Current mortgage balance is around £370k.
• Current house should have no problem for £600k if we want a quick sale. 
• We have been tied up with ongoing renovation, childcare costs and some necessary family expenses since buying.
• My husband accumulated around £30k of debt through a personal loan, balance transfers and credit cards. As far as I know, there have been no missed/late payments.
• The debt has now stabilised at around £30k rather than continuing to increase.
• £17k I borrowed from a friend for renovation. Repayment £700/month and cleared the principal in August 2026. I intend to continue to pay £700 a month until January 2027 as interest. But i can delay it to later. 

Current monthly expenditure

Item	Monthly
Mortgage	£1,550 (will probably increase to £2200 in Jan)
Council tax + household bills	£500
Commuting + petrol	£200
Groceries	£500
Repayment to friend	£700
Husband’s personal loan	£400
Family support	£400
House + car insurance	£100
Phone + internet + subscriptions	£70
Nursery	£900
Total	£5,320

This excludes variable DIY/renovation costs and some necessary overseas travel.

Debt timeline

The situation should improve over the next year:

• February 2027: £700/month renovation loan repayment disappears.
• August 2027: £900/month nursery cost disappears.
• August 2027: £400/month husband’s personal loan payment disappears.
  

although obviously some of this will be replaced by normal childcare/other costs as circumstances change.

Our current combined income is £122k

Proposed move

We are considering a property around £730k, mainly because of the child’s education.

If our current house sells for around £600k:

• Sale price: ~£600k
• Mortgage redemption: ~£370k
• Gross equity: ~£230k
• Purchase price: ~£730k
• SDLT and buying/selling costs: ~ 40k
• So we’d need a mortgage of approximately £540–545k.

My calculation is our current regular outgoing is £5320, but in Jan, the new mortgage deal will probably increase by £700 (25 years term) to around £2150/ month, which balances out my current repayment to friend that will end around same time.
But for the new house, if mortgage is £540k, we’re paying £2700 a month (30 years term) - difference is £550.
So I sort of trying to see if it can work. Also after August, the mortgage payment for new house will be more manageable.

We are worried that we may struggle with the lender’s affordability assessment for a £540–545k mortgage in the next few months.

ACG

If you cant pay the stamp duty, how would you move?

There is potentially the possibility maybe of you taking out a larger mortgage to clear the debt and for money for the stamp duty, but will that help your income/expenditure? It also means you are taking short term debt and paying it off over a very long term.

MWT

https://forums.moneysavingexpert.com/discussion/comment/82098245#Comment_82098245

Now we have the more detailed figures (just above your post) it looks like SDLT is covered out of the sale proceeds, hence the £540k mortgage.

That still leaves the debt though and it is hard to see how to balance the books when the salaries will struggle to justify a much larger mortgage but the debt will make affordability tricky if it is not cleared.

Clearly one for a broker to look at with all the details.