Advice Please!

leemuddywaters

Hi

I am currently renting a property along with my girlfriend, we earn around £3000 a month joint. I currently have two debts that are with debt collection agencies which I am currently paying, combined I owe are around £4000. My question is this, if we were to apply for a mortgage would I be refused due to these debts? Can someone please clarify how this works. Thanks.

dekh

Hi, at £3K per month would it not be simpler to clear the debt?

The way things seem to be being talked down and events reported, soon there'll be no deal better than 75% LTV and with clear credit history.

Conrad

Your overall credit rating will have a significant impact on mortgage availability.

You will almost certainly need at least 10% deposit but as you are earnign £3000 per month you could save that quickly.

leemuddywaters

I'm currently paying around £800 in rent, I couldn't pay it off within three months but am making regular payments. What I am really trying to find out is how will this effect me getting a mortgage in the future with my debts being with agencies, does this make a huge difference than if it were with the original company?

Conrad

Of course it makes a difference.

Imagine you are considering lending me £200,000, I tell you I can pay but that I could'nt pay back just £4000. What would you think?

cobbingstones

Why apply for a mortgage now. I realise that all this talk of house price crashing is just that (talk), but it might be worth seeing what the market does over the next year or two. If the 'talk' does come true, if you bought a house now, you could find yourself in a negative equity situation.

A_Nice_Englishman

Is there no way you can pay off the debt a bit quicker? If you still paying £50 a month as per this thread it's going to take 7 years to pay off.

It may be worth posting your SOA in the Debt Free Wannabe board to get some advice about your budgeting as you will need to save at least 10% deposit
and it will look a lot better to lenders if you don't have any debts when you apply.

pinkshoes

I'd say if you can't clear a £4k debt on your decent salary, then a mortgage company wouldn't think much of your application!

Why can't you clear the debt in a few months?

Assuming half the £3000 per month is yours (so £1500), then:

£400 rent
£80 bills (gas, elec, CT, water)
£30 phone
£100 car
£200 food
TOTAL: £810

Thus leaving you around £700 excess each month, which would take you less than 6 months to pay off your debt!

Then you'd need to save up a 10% to 20% deposit...

When you've done all that, THEN consider buying a house!

beecher

I'd agree with others - take 6 months to clear off your debts and then start saving for a deposit of at least 5%, as I take it you don't have one saved? Seems very little point in even thinking about mortgages until you've cleared your debts and saved a healthy deposit - by then things might be clearer.

leemuddywaters

We earn around 3000 joint not just my salary, if I could pay a lot more believe me I would be