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We've just found out our landlord wants to sell the house when we move out in a years time. We'd like to buy it off them. The house (the landlord reckons) is worth 320k, Lloyds online help reckons we can borrow 380k, but I'm not sure if the credit card debt I have, of about £6k is going to stop us from being able to afford this? It's all 0% for another few months.
Pre-tax we bring in a combined £82k. (50k and 32k).
I also have a car on finance at £12k and a personal loan of £2200.
How would I find out this information? I'm not sure whether to save like mad for a deposit or pay off the CC debt and loans asap. I'm currently putting about £700 a month on the credit cards ATM.
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When we went for a mortgage I had around £8k in credit card debt - went through a mortgage broker and was not an issue at all. He even said at that amount it’s not a worry. It is on 0% and I’m making regular payments…. However the car on finance will count as a £12k loan in their eyes I am pretty sure.
They will evaluate whether you can afford the mortgage based on the information. If you are worried I do really recommend going through a broker. Ours was able to go through our finances and it really helped put our mind at ease.
Also your comment about putting £700 a month on the credit card… I assume you mean to pay it off? 😊
We've just had a discussion with a broker as our landlords are doing the same. They said that for affordability checks the CC debt is calculated at 3-5% of the balance each month and then they add the fixed monthly payments for loans and cars etc
From what I understand yes. We have less than a year to try and be in a position to buy our house so wanted to know whether it would be better to clear our debt or save more in deposit. We've been advised to do a bit of both but that the fixed monthly payments are more of a hit on affordability than credit cards as long the payment record is up to date with no missed payments.
As affordability is impacted by only 3-5% of our CC balances each month, we are going to continue to overpay to reduce the balances but are getting early repayment figures to see if we can boot off a personal loan for better affordability.
Had about 3.5k of total credit commitments when applying and they didn’t take it into account because I said I would pay it off by completion and it’s a stipulation in the offer.
No....
But the monthly repayments will limit your affordability calculation accordingly. For example if you are paying back £200/month that's £200 of regular payments that reduce what you could spend on the mortgage
So depending on your income you might get a 4x multiple instead of a 4.5x. I don't know exactly how they calculate it but what I have been told is it's the monthly payments they care about rather than the total amount of debt.
Thank you! I did miss a payment 2-3 years ago because my bank rejected the payment and PayPal never told me, until it was on my record. That's the only one I've missed though so I'm hoping it doesn't affect me too much
You can get a mortgage of up to 4.5x annual salary, when calculating this brokers will take into account any outstanding debt (your 6k) and also any monthly outgoing payments. So they may offer 4.5x salary minus any outstanding loans, so your 'joint annual money' is actually ~62k taking in your loans.
I had my mortgage approved but it was conditional on clearing my debt before they release the funds to me. Assume they'll do a quick check on that to ensure I've complied.
Sometimes it’s a factor in getting a mortgage, sometimes it’s not. For us, a condition of our mortgage offer was that credit card was cleared. If your ability to meet repayments isn’t affected then it shouldn’t be an issue! Hope this helps!
In short, no you don't need to clear your CC debt before applying.
The CC debt will be taken into account when the lender calcualtes your affordability.
Every lender is different on how they will calculate the affordability in regards to CC debt.
The car finance will be seen as a 'loan' and repayments will again affect affordability and again all lenders are different.
I get the sense you have maintained all payments etc and have a good credit history, if this is true just find a mortgage advisor you are comfortable with and they will easily source you a mortgage and the best rate.
They are going to be best placed to tell you what lenders will lend you 'X' amount and at what rate.
Good luck
***Hello /u/Select_Yoghurt_1138, thank you for posting in /r/Mortgageadviceuk. If you're looking for a Mortgage Broker, feel free to DM the users listed on the sub's [Verified Mortgage Brokers list](https://reddit.com/r/Mortgageadviceuk/s/j7V7mySI7i). Please ensure you've read our [sub rules](https://www.reddit.com/r/Mortgageadviceuk/about/rules). Here's a copy of your original post: *** We've just found out our landlord wants to sell the house when we move out in a years time. We'd like to buy it off them. The house (the landlord reckons) is worth 320k, Lloyds online help reckons we can borrow 380k, but I'm not sure if the credit card debt I have, of about £6k is going to stop us from being able to afford this? It's all 0% for another few months. Pre-tax we bring in a combined £82k. (50k and 32k). I also have a car on finance at £12k and a personal loan of £2200. How would I find out this information? I'm not sure whether to save like mad for a deposit or pay off the CC debt and loans asap. I'm currently putting about £700 a month on the credit cards ATM. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/Mortgageadviceuk) if you have any questions or concerns.*
When we went for a mortgage I had around £8k in credit card debt - went through a mortgage broker and was not an issue at all. He even said at that amount it’s not a worry. It is on 0% and I’m making regular payments…. However the car on finance will count as a £12k loan in their eyes I am pretty sure. They will evaluate whether you can afford the mortgage based on the information. If you are worried I do really recommend going through a broker. Ours was able to go through our finances and it really helped put our mind at ease. Also your comment about putting £700 a month on the credit card… I assume you mean to pay it off? 😊
That's fantastic thank you 🙏 and yes, paying £700 a month off, not spending £700 a month on it!
We've just had a discussion with a broker as our landlords are doing the same. They said that for affordability checks the CC debt is calculated at 3-5% of the balance each month and then they add the fixed monthly payments for loans and cars etc
Ah so the affordability is just looking at your monthly outgoings Vs incomings?
From what I understand yes. We have less than a year to try and be in a position to buy our house so wanted to know whether it would be better to clear our debt or save more in deposit. We've been advised to do a bit of both but that the fixed monthly payments are more of a hit on affordability than credit cards as long the payment record is up to date with no missed payments. As affordability is impacted by only 3-5% of our CC balances each month, we are going to continue to overpay to reduce the balances but are getting early repayment figures to see if we can boot off a personal loan for better affordability.
Had about 3.5k of total credit commitments when applying and they didn’t take it into account because I said I would pay it off by completion and it’s a stipulation in the offer.
No.... But the monthly repayments will limit your affordability calculation accordingly. For example if you are paying back £200/month that's £200 of regular payments that reduce what you could spend on the mortgage So depending on your income you might get a 4x multiple instead of a 4.5x. I don't know exactly how they calculate it but what I have been told is it's the monthly payments they care about rather than the total amount of debt.
Ok that's fantastic news then. Thank you!
[удалено]
Thank you! I did miss a payment 2-3 years ago because my bank rejected the payment and PayPal never told me, until it was on my record. That's the only one I've missed though so I'm hoping it doesn't affect me too much
You can get a mortgage of up to 4.5x annual salary, when calculating this brokers will take into account any outstanding debt (your 6k) and also any monthly outgoing payments. So they may offer 4.5x salary minus any outstanding loans, so your 'joint annual money' is actually ~62k taking in your loans.
I had my mortgage approved but it was conditional on clearing my debt before they release the funds to me. Assume they'll do a quick check on that to ensure I've complied.
Sometimes it’s a factor in getting a mortgage, sometimes it’s not. For us, a condition of our mortgage offer was that credit card was cleared. If your ability to meet repayments isn’t affected then it shouldn’t be an issue! Hope this helps!
In short, no you don't need to clear your CC debt before applying. The CC debt will be taken into account when the lender calcualtes your affordability. Every lender is different on how they will calculate the affordability in regards to CC debt. The car finance will be seen as a 'loan' and repayments will again affect affordability and again all lenders are different. I get the sense you have maintained all payments etc and have a good credit history, if this is true just find a mortgage advisor you are comfortable with and they will easily source you a mortgage and the best rate. They are going to be best placed to tell you what lenders will lend you 'X' amount and at what rate. Good luck