Debt, saving and buying a property

[blossombloss]

Hi, would really like to hear from people who have had between 5-10k debt that they managed to pay off and then end up buying a property. I've got payment plans in place for my debt and I'm saving on top, I'm saving to really do two things add extra payments to my debts and also save for a property. I know Martin Lewis says you should just put your extra money towards paying off debt, but I don't want to be in a position to not be able to pay for emergencies and I may have to move soon and so want the saved up cash for deposit etc.

Really keen to hear from people who've been through this, what tactics worked for you in paying off your debt? How long did it take? Are there any saving tactics you used that you'd really recommend? How did you find your mortgage advisor? I know my credit will still look bad even after I've paid off my debt and their advisor who do work with those who have bad credit. I don't forsee that I'll have any one dying and leaving me money, and it's just me on my 30k salary, so just keeen to hear stories, so I know there is light at the end of the tunnel!

 

[HoGi]

I was in this position about 6 years ago

Unfortunately I didn’t make a big dent in my debt until I stopped saving. I put all my savings on debt and then everything I was paying off each month went straight into savings.

 

[Joannabloggs]

I'm lucky that I managed to buy my flat on a 27k salary alone and the only debt I've ever had was my student loan. I just googled a mortgage broker, and managed to find one for £400. Having a broker meant i didnt have to do nearly as much paperwork as they did most of it for me, and they also found deals which weren't available unless you work in that field. In the long run, i think a broker pays for itself

When I moved in I only had a 1k emergency pot but now it's nearly 9k, I did that by not going on any holidays until I had 3 months salary saved.

I would advise you stop saving and focus on your debt. Interest rates are about to go up so it's only going to get harder for you to pay off your debt. Most savings rates are piss poor atm so I don't think showing money away is useful in the short term whilst u have that.

On top of that mortgage lenders ard getting stricter so any debt u have will only futher limit what you can borrowand getting a mortgage is becoming harder. The sooner get a mortgage the sooner u can avoid the interest rate increases and potentially borrow more.

 

[rainbowlemon]

I would also suggest paying the majority of your debt first.

 

[aymef]

Hello
I have around £3k on a credit card, and £850 overdraft. My credit score is fair. I’m looking to get on a shared ownership property and had a 5% mortgage in principle offer- what do you think my chances are off actually getting the mortgage approved. Should also mention I’m self employed and have an account- but I’m on top of that, I’ve been self employed for 10 years

 

[NewOlive]

Hello
I have around £3k on a credit card, and £850 overdraft. My credit score is fair. I’m looking to get on a shared ownership property and had a 5% mortgage in principle offer- what do you think my chances are off actually getting the mortgage approved. Should also mention I’m self employed and have an account- but I’m on top of that, I’ve been self employed for 10 years

When your broker comes to look at your money they will often tell you to use your deposit / part of it to pay off debt - so say you've saved 10k and have 3k debt they will say pay it, and you'll only have 7k deposit then... they sometimes also ask you to use it to pay off things like cars on finance etc.

Hi, would really like to hear from people who have had between 5-10k debt that they managed to pay off and then end up buying a property. I've got payment plans in place for my debt and I'm saving on top, I'm saving to really do two things add extra payments to my debts and also save for a property. I know Martin Lewis says you should just put your extra money towards paying off debt, but I don't want to be in a position to not be able to pay for emergencies and I may have to move soon and so want the saved up cash for deposit etc.

Really keen to hear from people who've been through this, what tactics worked for you in paying off your debt? How long did it take? Are there any saving tactics you used that you'd really recommend? How did you find your mortgage advisor? I know my credit will still look bad even after I've paid off my debt and their advisor who do work with those who have bad credit. I don't forsee that I'll have any one dying and leaving me money, and it's just me on my 30k salary, so just keeen to hear stories, so I know there is light at the end of the tunnel!

I had 8k worth of credit cards and I consolidated all my loans to an MBNA loan and repaid £257 a month for 3 years, I saved alongside for things like you say emergencies etc, but I only have a couple of hundred pound.

I paid extra money straight into the loan and it brings your interest and loan amount down, I've now got it down to 1600 with 1 year still left on it, but it will end before then. Annoyingly I but 500 back on Credit card (same position as you, have the savings to pay off but don't want to be stuck!)

I budget everything now for me and my partner each month, then plus 200 quid for extras

 

[Nnrr46]

Hi, would really like to hear from people who have had between 5-10k debt that they managed to pay off and then end up buying a property. I've got payment plans in place for my debt and I'm saving on top, I'm saving to really do two things add extra payments to my debts and also save for a property. I know Martin Lewis says you should just put your extra money towards paying off debt, but I don't want to be in a position to not be able to pay for emergencies and I may have to move soon and so want the saved up cash for deposit etc.

Really keen to hear from people who've been through this, what tactics worked for you in paying off your debt? How long did it take? Are there any saving tactics you used that you'd really recommend? How did you find your mortgage advisor? I know my credit will still look bad even after I've paid off my debt and their advisor who do work with those who have bad credit. I don't forsee that I'll have any one dying and leaving me money, and it's just me on my 30k salary, so just keeen to hear stories, so I know there is light at the end of the tunnel!

Im in no place to give advice! But yes would definitely agree with sorting the debt first. I think it would be so stressful trying to sort the debt when you have mortgage payments on top, unneeded. Plus you should be able to borrow more if you have no debt Your debt seems minimal compared to a lot of people I know. Id say clear that then start fresh, you should be able to get a lovely home with £30k salary and wont have any stress of other debts so can budget better. Plus ive heard that house prices are likely to start dropping soon with interest rates and the cost of living rising.. so might be worth holding on for a bit im also in the process of buying my first property and its so hard right now. One thing I will say is if its credit card debit, do NOT close the credit cards down once paid off, just keep them open with zero balance. As cancelling/closing credit cards can really make your credit score go down by a lot, which will effect what you can borrow and the interest rates offered by the lender

 

[Be More Pacific]

One thing I will say is if its credit card debit, do NOT close the credit cards down once paid off, just keep them open with zero balance. As cancelling/closing credit cards can really make your credit score go down by a lot, which will effect what you can borrow and the interest rates offered by the lender

But even with zero balances, some lenders will still take the credit limits into consideration when calculating affordability - the theory being they could issue a mortgage offer and, the very next day, you run them all up and max them out. And it happens more than you think - working for a new build mortgage broker for ten years, where there would be build delays and new mortgage offers required, meaning a new credit search would be carried out and people then failed on affordability, taught me that.

And I wouldn't get hung up about your individual credit score either. Virtually all lenders have their own credit scoring systems in place, which reflect things that are important to them. Your details are input, a credit search is run (which looks at your credit accounts - loans, store cards, credit cards etc) and a pass/fail decision is given. In my experience, no weight is given to credit scores provided by credit defences agencies.

 

[Nnrr46]

But even with zero balances, some lenders will still take the credit limits into consideration when calculating affordability - the theory being they could issue a mortgage offer and, the very next day, you run them all up and max them out. And it happens more than you think - working for a new build mortgage broker for ten years, where there would be build delays and new mortgage offers required, meaning a new credit search would be carried out and people then failed on affordability, taught me that.

And I wouldn't get hung up about your individual credit score either. Virtually all lenders have their own credit scoring systems in place, which reflect things that are important to them. Your details are input, a credit search is run (which looks at your credit accounts - loans, store cards, credit cards etc) and a pass/fail decision is given. In my experience, no weight is given to credit scores provided by credit defences agencies.

Ah ok I didnt know that! Its just from experience our score went down a lot when we cancelled them (we were so happy when we cleared the debt and then that happened! And were trying to buy a house. I went into panic mode ). Have they scapped the affordability/stress test now? I think i read something in the news recently about that

 

[Be More Pacific]

Ah ok I didnt know that! Its just from experience our score went down a lot when we cancelled them (we were so happy when we cleared the debt and then that happened! And were trying to buy a house. I went into panic mode ). Have they scapped the affordability/stress test now? I think i read something in the news recently about that

I stopped working in 2014, just before the new regulations were put in place, but I did read something about the stress test going, which makes absolutely no sense at all in the current climate. Surely now is the time you'd be wanting to check that who you are lending to could afford the mortgage if rates went up? Absolutely baffling.

Other affordability checks are still in place.

Mortgage lending rules eased by Bank of England - BBC News

Some potential homebuyers may find it easier to get a loan as the central bank eases borrowing rules.

www.bbc.com

 

[Erling Haaland]

I bought while in LOADS of debt. Not saying that’s the best way to go about it because it’s 100% not.
Paid off the debt once in the house.
If your on a debt repayment plan then it might be different?

 

[NewOlive]

How did you buy with debt? Which lender please?

 

[Dilly2022]

How did you buy with debt? Which lender please?

I bought with Leeds this year, had about 10k of debt at the time too

 

[Erling Haaland]

Halifax! I said I’d pay it off before completion but didn’t and they never checked.

 

[Be More Pacific]

Halifax! I said I’d pay it off before completion but didn’t and they never checked.

Was it a condition or your mortgage offer? If so, your solicitor should have ensured it was repaid.

 

[Erling Haaland]

I’m not sure? But my solicitor was crap

 

[whyhellothere83]

Hi, would really like to hear from people who have had between 5-10k debt that they managed to pay off and then end up buying a property. I've got payment plans in place for my debt and I'm saving on top, I'm saving to really do two things add extra payments to my debts and also save for a property. I know Martin Lewis says you should just put your extra money towards paying off debt, but I don't want to be in a position to not be able to pay for emergencies and I may have to move soon and so want the saved up cash for deposit etc.

Really keen to hear from people who've been through this, what tactics worked for you in paying off your debt? How long did it take? Are there any saving tactics you used that you'd really recommend? How did you find your mortgage advisor? I know my credit will still look bad even after I've paid off my debt and their advisor who do work with those who have bad credit. I don't forsee that I'll have any one dying and leaving me money, and it's just me on my 30k salary, so just keeen to hear stories, so I know there is light at the end of the tunnel!

Whereabouts in the country are you? That makes a HUGE difference. Keep your emergency fund if it makes you feel safe. Repay any debt you are paying high interest on ASAP (car finance and loans tend to be lower than credit cards). I got my first house with around £5k debt but it depends on how much of a mortgage you need.

emergency fund should be 6 months of expenses or income after tax.

Don’t forget to take out income protection insurance.

If you’re a first time buyer, look at a lifetime CASH ISA with moneybox. You have to hold it for a year before purchasing a property though. Open it ASAP with even just £1 to get the year rolling

you should be able to get a lovely home with £30k salary se the credit cards down once paid off, just keep them open with zero balance. As cancelling/closing credit cards can really make your credit score go down by a lot, which will effect what you can borrow and the interest rates offered by the lender

It depends where you are in the UK x

I bought while in LOADS of debt. Not saying that’s the best way to go about it because it’s 100% not.
Paid off the debt once in the house.
If your on a debt repayment plan then it might be different?

it is completely dependent on your affordability and the loan to value of the property. If you’re up north in the UK, you’re more likely to be accepted if you’re on a decent salary but have debt purely because of the property prices

Was it a condition or your mortgage offer? If so, your solicitor should have ensured it was repaid.

Not necessarily. If the mortgage repayment is within affordability, debt doesn’t matter that much. Especially if they have a decent deposit to put down.