Mortgage with debt

[sassyx]

Hi my partner and I are looking to get a mortgage this year. I will have 100k coming soon (my half of a house I inherited) just waiting to be finalised could be another month or so. My question is, we're currently in about 5k debt with credit cards and loans etc which I will be paying off once money lands. Should I wait to apply for a mortgage till this is paid off or could I start getting some idea of what I will be allowed to borrow?

Reason I ask is because I'm on a timescale Im expecting second baby and I'd like to get mortgage before they deduct more off me for this baby. I'm also due to start paying childcare soon which I know they'll also deduct money off what they'll let me borrow which is why I'm keen to do it now but at the same time the debt will also have impact.. I'm sorry if this makes no sense at all I'm absolutely clueless and any advice would be greatly appreciated.

I would wait until you've got the money and paid off the debt. They will ask you during the application whether you have an knowledge of circumstances changing, and adding a second dependent would be this. Although I suppose there are ways to conceal it, it's just whether or not you should.

I would go and tell the truth to your mortgage advisor.

You say you are clueless, I would be too - go and ask the professional for her professional advice.

I don’t think it will make much difference. Just make sure you are paying them off and if possible slightly overpaying each month. I don’t think a lender will turn you down. We were stretching ourselves last year and the lender wrote in the conditions “pay off credit card before mortgage issued” as part of the offer. They didn’t decline to lend to us. Nor did the broker ever flag it up as an issue. I guess it’s relative to income and how big it is?

I find it annoying that lenders prefer to lend to people WITH debt, but there you are, it’s a thing. They like to see evidence of credit being responsibly managed. My OHs credit rating shot up to almost 1000 this year after we got an interest free credit card, put all our monthly expenditure on it, and started paying it off in full every month.

I would have thought 5k debt will make very little difference. But phone a mortgage broker like L&C and they'll be able to give you free advice on your situation. When I was last applying for a mortgage, I had just accepted a new job so had various questions about what would affect a mortgage application and a broker was so helpful in explaining what mortgage cos do and don't care about.

5k isn’t going to make much difference at all. We remortgaged recently and I had about 1k sitting on a credit card when the initial application went through. My lender (Halifax) asked if it would be paid off before the mortgage is finalised and all I had to do was provide the evidence that I’d paid it. What did adjust my borrowing potential was a car on pcp but the difference was so small wasn’t a problem.

I would do it before the baby. Once the baby arrives, a second dependent and childcare costs will be taken into account, which will have a much bigger impact than the £5k debt. Have you done a mortgage affordability calculation taking into account childcare and baby?