Clearing outstanding C-cards and loan first?

studentchick1

Sorry this is probably going to sound really stupid.

Had a meeting with the bank today about a mortgage, they have offered me and partner £85k, which with a 15k deposit will buy our house. However they have offered this if we clear all our credit card and loan balance.

However, they did not ask about overdrafts. Do they not take these into consideration? If so would it be possible to transfer one of my credit cards to my overdraft?

Or is that just plain stupid idea and that they will class that as credit cards and loans?

many thanks

UK007BullDog

Which lender is offering you the mortgage?

They are looking at affordability. Their argument is that you will not be able to afford your new mortgage, loans and credit cards at the same time. Hence they will only lend you that amount if you pay off your loan and CC's. Moving one of the cards to your overdraft will not do the job. So if no other funds you will have to use part of your deposit to pay the existing debts. Which means you will not have enough deposit. So you might need to look for a cheaper property.

How much is the loan (total outstanding) and the credit cards? What are your incomes before tax?

studentchick1

HSBC.

Combined income £20k. will offer us £85k maximum, on affordability. with no debts. Total debt £2k loan and £1600 on credit card. Can totally pay off the loan, but can not clear all of the credit card quickly. So was just looking at other options.

UK007BullDog

Well I think £85K is maxing you out big time. That is more than 4x income. I think you guys need to save up more and clear your debts. You will have hardly any money left at the end of the month just to live on and have some fun.

Idiophreak

Personally I'd just hold off for a couple of months (could you rent somewhere for 6 months?) until everything's cleared - it'll be sorted out much quicker that way.

House prices are pretty stable in most places at the moment anyway, so no real panic to buy right now.

studentchick1

At the moment it seems a lot. But I graduate in 6 weeks, and have already been accepted for my job on £22k, so by the time the mortgage is complete we will have more money coming in.

There is a need to do it now, as we have been offered the house at £40k less than the value, due to it being an older member of our families home. I am trying to get them to wait until May, but not sure they will.