Debt

[Horsesforcourses23]

Hi,

Ok so I am becoming a regular asking for help / advice but just wondering on general thoughts for this one.

I have met a lovely guy and things are going really well. We had very loosely discussed the future and plans etc and discussed buying together. It is topic which is coming up more frequently and I would assume in about 12 months that will be the stage we are at.

However I have a substantial amount of debt, nothing I cannot manage or handle but it would, I assume, have a negative effect on a mortgage application. It will take me (unless I win the lotto) about 5 years to be clear.

I haven't told him about this, as like I said the conversation's have been vague and non committal.

Basically what I am wondering is do I tell him now about the debt or further down the line? I am worried if I leave it too long he may have ideas we can get a mortgage for X when in actual fact we can only get X due to my debt? But am I sharing my financial information too soon?

I hope that all makes sense.

Thank you, I can manage the monthly payments and everything like that but I have a balance debt remaining currently of about £27k. Which is obviously going to take me time to pay off and would have a negative impact on borrowing.

Check out Dave Ramsey on youtube. He's fantastic!

How long are you together? I think at some point you do have to mention it otherwise it feels like lying by omission. It could be in context of needing to be careful with spending or saying it will be a while until I can buy a house. Money often gets discussed early on, just day to day stuff as it is important to all of us..I remember saying to a bf I needed to tidy up my finances, he asked if I had debts so I clarified it was just a review to ensure my pension & savings ok.

How did you accrue the debt? Be prepared for him to question, I would want to know the backstory to see if we were financially compatible.

No I have never missed any, everything is up to date. I can't over pay but can make a bulk payment's I.e. £1000 etc without being charged anything extra. The debt is over a loan and a credit card and once I pay the credit card off which is £150 a month (and nearly finished) I can start saving that £150 to pay off the loan. I am also "meant" to be getting a payrise and I was just going to save the difference and add that to my savings for the loan? Does that make sense?

@Salemshadow Thank you I will!

@lifebegins - we have not been together that long really and it has only been brief conversations we had about maybe buying together. It's just becoming more apparent that we are really good together and that is where the future path will go.

The back story is complicated, as a rule I am exceptionally good with finances and have never ever done anything like that, but I had a bad few years, my details are a bit outing but I had family come to live with me and I couldn't afford to house us all (There was no support with this, addiction issues etc) paying for the childcare that was needed and stuff (I have no children). But really it was my own stupid fault, I should have stopped it earlier than I did but hindsight is a wonderful thing and I thought I was doing the right thing at the time, I just seem to have got in such a mess since then :-(

I don't think you need to be fully open with details of debt but worth saying that your finances aren't the best. Snowballing repayments is a really good idea and moneysavingexpert has calculators to show the benefits.

I hope you feel able to say "I have to be careful this month as need to pay down debt". It is important you are able to be open because if he finds it unacceptable then you should find out sooner rather than later.
Finances are such an area of potential conflict so important to see if you can be on the same page.

@lifebegins Thank you for your advice, I can say I need to be careful and things we have just never had a very serious chat about finances but I do understand I need to start addressing it sooner rather than later.

You can go into your local bank and ask them to have a look at a mortgage calculation for you, they don’t have to credit check you to do this, but it will give a very good indication as to whether you are eligible or if you are highly likely to be declined, do that first and then decide whether you should tell him based on the outcome.

I would tell him ASAP. For some it’d be a real dealbreaker. Better to get it out there now. I told my OH within about a month or two of making it official about my financial history as I’d been bankrupt around four years previously and it still affected my credit to the extent I needed a guarantor to rent. I knew I had to tell him as I didn’t want to hide it, and it’s a good job I did as we rented a year into being together and I was declined and needed a guarantor, and now getting a mortgage my credit has made us high risk and we have to use a subprime lender with higher rates of interest.

If you think you may have a future you need to say something sooner rather than later. OH was really understanding and I clarified to him I have no debt anymore and explained a bit about my current finances and whatnot. I’m fairly sure if he’d found out or even if I’d told him I was £20k+ in debt he’d have reconsidered things between us as he’s very financially minded and wanted to buy a house and have kids and I think he’d have really struggled to imagine doing all of that with someone with significant debt (which is fair enough imo). He grew up with financial issues in the home and would never bring a child into the world in a relationship with so much debt.

Sorry to sound so pessimistic OP but I think you have to tell him pretty soon, and he may not respond well. Your chances of a mortgage with that amount of debt are very slim. And even if you can get one he’ll find out as we’re applying jointly for one atm and let me promise you there’s no stone left unturned and nothing we don’t know about each other’s accounts and spending and credit. Full transparency.

If you tell him with a plan of action you can show him and an estimate date for being debt free and can show you’ve not accrued any in a long time and are just paying down, he will probably respond better. But I have to ask, unless you’re earning very very well are you realistically ever gonna be able to pay this off fully with interest creeping up? Have you sought advice from stepchange? I was only £6-7k deep when I went bankrupt with a debt relief order but it was unmanageable at the time and it was one of the best decisions I’ve ever made and i’m so thankful for it, but it comes with serious downsides and might compromise your ability to get a mortgage for a good seven years at least. Then again you’ll be unlikely to get one anyway with that much debt. Mortgage companies are so cautious. I know PP advised going into a bank to check what you could get but that advice is generally useless as what they say in theory you can get can be worlds away from reality when they have your full financial picture, they trend towards telling you it’ll be fine so you apply with them and they can then consider it or not, cos it gives them the chance of your custom. We did the same with our bank and were told we’d be absolutely fine only to find when it came to applying the five year old DRO we’d told them about ruled us out instantly.

@stack thank you for your honesty. I know I'm in a mess, the loan is a fixed amount for the whole term and likewise my mortgage payments are currently fixed so I should be ok and I can manage the payments but regardless I know I have to say something! Thank you

I’d honestly say something.

I wouldn’t be best pleased if I was dating someone and it started getting serious and then they say ‘oh btw I have 27k worth of debt’.

It’s a lot and will hinder you being able to do things together. I’d like to know ASAP.

I think if it’s soon enough to be talking about buying a house, it’s soon enough to mention your debt. I would be pissed off if I felt that someone had kept this from me, so the sooner the better I would say.

Thank you all for your advice, I appreciate it and will speak to him over the weekend and let him know where the land lies etc

I just wanted to post a quick thank you to everyone. I spoke with him at length over the weekend and explained all the circumstances etc. He was very understanding about all this and also helped us get a better picture of where the land lies. So thank you all for your helpful advice :-)

Good for you, much better that it has been discussed