Buying new home when you have debt

[theworldismyoyster2022]

So selling our home and looking to upsize.

Have a fair bit of equity in property that I want to use for new home.

I also have some debt I incurred when I took a lot more maternity leave than I'd anticipated. 2 credit cards and a loan. I want to consolidate to one, but can't do that atm.

I earn well, so I can manage and my partner also earns well. I'm going to try and pay off as much as I can before we complete on our new house, but if I commit to the lender that this will be done, to the check before completion? Some people are saying they don't, but if you fall into trouble with mortgage and unable to pay etc, it will be worse?

Has anyone been in this situation where you've promised to pay off before completion and they've checked or not checked?

I think you'd really need to ask a mortgage broker and different lenders might have different policies, but AFAIK they look at your debt as part of an overall affordability picture, so if you can comfortably afford the proposed mortgage and the debt repayments (remembering that a lender's definition of what's comfortable can be different to a normal person's), 'promising' the lender you'll pay it off is neither here nor there, it might still be a good thing to do but it won't affect their decision.

Whereas if they see it that the mortgage +debt is overall unaffordable within your incomes, then they'll probably say no upfront rather than accepting a somewhat nebulous promise to pay it off and then withdrawing the offer if you don't. When you say you'll pay the debt off by time of completion, you mean from normal income/savings or out of your equity in current property? Absolutely do not take on more debt, mortgage or otherwise than you are confident you'll be able to repay, either way!

How much equity and how much debt ?

Me and my husband had £5k of credit card debt when we applied and we didn’t have to pay that off before completion.

What's the interest rates on the cards and loan? I don't know if it's still the case, but you used to be able to take out personal loans at under 3% interest, and there's endless no fee, no interest balance transfer offers on credit cards.

That looks like very cheap debt compared with any new mortgage borrowing going forwards, so switching low rate debt onto your mortgage could end up being very expensive, especially if it pushes you up a LTV tier.

Do you need to move house, or is it just a 'nice to have'?

I am really sorry - I accidentally posted on your thread instead of starting my own. So sorry! I will ask to delete asap.