Debt Camel

Answers to questions about debts and credit ratings - in plain English!

I have debts – can I get a mortgage?

Finding the right path to a mortgage - isolated boathouseMortgage lenders have to assess in detail whether a loan is really affordable for the borrower. You may think “well the mortgage is going cost the same as my rent, so obviously I can afford it“, but the mortgage lender will be thinking ahead to when interest rates go up in 2019 or 2020.

A few years ago, lenders only looked at the size of your deposit, your credit rating and your income. Now in 2019 the “affordability calculations” look into your outgoings in detail. Your debts are an important part of this: credit card repayments, any bank loans, car finance payments, the size of your overdraft etc.

This doesn’t mean you can’t get a mortgage if you have debts, but it is more difficult than it used to be.

Let’s look first at the three things that are most important to mortgage lenders and then at what you can do now and over the next six months to a year to improve your chances.

1) Your deposit

With a large deposit, a bank will feel much happier about any minor credit history problems you have had in the past. With a low deposit everything else has to be looking great to get a good mortgage deal.

People often ask if it’s a good idea to get a loan so they have a larger deposit… No!

Although having a 10% deposit rather than 5% may make it look as though you can get one of the “best buys” on offer, in practice the extra borrowing is likely to mean that you will fail the affordability calculations so you won’t get a mortgage at all.

If you have been saving in a Help To Buy ISA, make sure you know the rules about when you can get at the money because you can’t use it for the “exchange deposit”, only when you complete the purchase.

2) Your “affordability” – check it now!

Years ago lenders used your income as a rule of thumb to decide if you would be able to manage the amount you want to borrow – for example, they might lend four times your income .

But in 2019 a mortgage lender will ask for a lot more details, often including your other debt repayments, your childcare costs, your commuting costs, and a lot more. And they want evidence about these costs, often asking three or six months bank statements.

Each lender has its own rules and these can differ a lot as discussed here: The dark art of mortgage affordability.

Many “mortgage calculators” are very basic and don’t ask the right questions to have a hope of giving an accurate answer to how much you may be able to borrow. But I suggest you try this Nationwide mortgage affordability calculator as it is much more detailed.

How your current debts affect affordability

There is a wide range here, from having debts you are currently struggling with at one end of the spectrum to “No problems, the car loan comes out when I get paid and I clear my credit card in full each month” at the other:

  • If you are at the very easy end, then your debts are probably falling nicely every month already. Unless you have had debt problems in the past (see below for your credit record), you just need to carry on and make sure your credit record stays clean until your house purchase has completed.
  • If you know you are struggling to make debt repayments, the mortgage lender is likely to see that and you are very unlikely to get a mortgage. You need to spend a few years getting your debts down to more easily manageable levels.
  • If you are in a debt management plan you are also going to find it difficult to get a mortgage. You may be happy to carry on paying £5 a month to some old debt, but the mortgage company won’t like it. Even if your debts defaulted more than 6 years ago so they aren’t on your credit record at all, the mortgage lender will still care about them… read this article: Can I get a mortgage in a DMP?
  • If you are currently insolvent (in an IVA, or you have been bankrupt, in an IVA or a Debt Relief Order (DRO) in the last 6 years) you won’t be able to get a mortgage or remortgage however large your deposit.

Many people will be somewhere in the middle – it would nice if your debts were lower, but they aren’t a big problem and you are coping with the repayments.

But it is the mortgage company that makes the judgments, not you. You may not care much about that 8k of debt on a 0% balance transfer deal, but a mortgage lender knows that if you miss a payment suddenly interest is going to be charged and that you may not be able to refinance it at the end of the 0% offer.

3) Your credit record – check it now!

You must check your details with all three credit reference agencies. This applies even if:

  • your credit record must be fine as you have never missed a payment in your life; or
  • you look at your credit score every month and its great.

There could be something on a credit reference agency you don’t check that is wrong – perhaps an incorrect link to someone else’s account, or a wrong previous address, or a debt you are unaware of from when you moved house.

An error on your file can take months to get corrected, so check now!

Finding an unexpected problem when you are in the middle of buying a house can often mean your purchase falling through. This really does happen to hundreds of people every year, see How a stranger’s £40 parking ticket cost family their new home for some stories.

If you have a perfect record, great! See below for making sure it stays that way until your house purchase completes.

How bad are different sorts of previous problems?

With a less than perfect record, how serious is your credit problem? Mortgage lenders usually rank difficulties in roughly the following order, starting with the most minor:

  1. late payment
  2. missed payment,
  3. AP/debt management
  4. default,
  5. CCJ,
  6. insolvency (IVA, DRO, bankruptcy)

And how old are the problems?

It isn’t just the type of problem that is important, it also matters how long ago it was and when you sorted it out.

A debt problem that you have “solved” is much better than one that is still ongoing… so if you have defaults or CCJs on your credit record you have to settle these debts.

A settled default shows you had problems a while a go. But any default which is still outstanding shows you still have debt problems – not good for your mortgage application.

Some mortgage lenders will reject any applications with defaults even if they are settled. But some high street lenders don’t mind past problems:

  • if your defaults were more than three years ago
  • and they have been repaid for more than a year.

What the default date is on your credit record is really important.

A defaulted loan will disappear totally from your credit record six years after the default date. So if you have several old defaulted debts which you have settled that will be dropping off your record in September say, think about delaying any mortgage application until they have gone. This will give you the widest choice of mortgages including the best deals.

Some lenders don’t mind settled defaults if they are old. So if the default date for one of your debts looks a lot too recent, you should try to get this corrected, see What should the default date for a debt be? 

In addition, most lenders don’t like you to have had recent payday loans, even if these were paid back on time, see Payday loans make it harder to get a mortgage.

What is your overall picture like?

How good is your overall picture: deposit – affordability – current debts – credit record ? If it’s not looking good, then you are going to have to spend some time, possibly even years, improving it.

If it’s just about OK you hope, how much better you could make it in the next 6-12 months?

Read up about Snowballing, this is the fastest way to clear debt and it will also result in your credit record improving a lot.

Time is a great healer of credit records, adding six or twelve months of perfect credit ticks every month, combined with your debt balances falling can make a big difference.

10 tips for a trouble-free mortgage application in the next year

Once you know you want to move by a certain date, you must do everything possible to avoid new problems appearing. So:

  1. don’t make any credit applications in the few months before asking for a mortgage, nor between getting an offer and completing. This includes not getting a new car on finance until after you have moved! If you have to, then keep the cost down as much as possible.
  2. if you have any 0% deals ending in the next few months, paying down that balance as fast as possible as you don’t want to have to refinance that just before a mortgage application.
  3. if you cancel any direct debit, double check your account is clear first. Be especially careful if you change mobile contracts because they are a common cause of credit record problems if the last bill isn’t fully paid.
  4. make sure credit card balances are reducing and that you are paying more than the minimums. The mortgage lender can see not just your current balance but also your borrowing and repayment history. Ideally manage without spending on the cards at all if you are trying to reduce a balance.
  5. if you have several credit cards with a zero balance, think about closing at least one. If you are trying to show a mortgage lender that you won’t get into future debt trouble, getting rid of that spare card is a simple way.
  6. absolutely no payday loans in the year before a mortgage application. Even if you can repay it on time, many lenders see these as a sign of financial problems.
  7. if you have an overdraft, try to reduce it. If you don’t have an overdraft, make sure it stays that way!
  8. keep your “discretionary expenses” well under control. When someone complains their recent bank statements aren’t normal because they went on a good holiday in November and then it was Christmas, the lender is likely to disagree and think that these things happen every year!
  9. don’t change jobs!  This may not be under your control but if you have any choice, this is not the time to switch employers. If you do, you may have to postpone thoughts of a mortgage for 6 or 12 months or longer if you become self-employed.
  10. don’t change your name! It won’t stop you getting a mortgage but it can cause temporary problems on credit records so why take the risk. If you have just got married, leave changing the name on your accounts until after you have moved.

Getting that mortgage – who and how to apply to

Unless your credit record is great, it’s good to go through a broker who should be able to advise which lenders will be happy with your credit record.

Every lender is different. Not only do they use their own assessment calculations, but some are more flexible than others. Some high street lenders adopt a Computer says No approach to low and average deposit loans if you have any recent credit record problems at all. If you have a very large deposit, some lenders may be more willing to accept an application with recent problems.

Contacting banks individually can waste a lot of your time and any rejected mortgage application will leave a ‘footprint’ on your credit record. So if any of the following apply, consider going to a mortgage broker instead:

  • you have a low deposit;
  • you need a large loan in relation to your income;
  • your credit history isn’t very good; or
  • there is anything unusual about your situation.

Money Advice Service’s article on Where to go for the best mortgage deal has good advice on finding a broker.

More Debt Camel articles:

Improve your credit score for a mortgage

35-40 year mortgages – be careful!

95% mortgages - what you need to know

95% mortgages – what you need to know

Comments

  1. I have around £6000 in credit card debt that is on a 0% card but with no other credit agreements, and is 28.5% of my available credit. My salary is around £35k and my parents are prepared to give me money for a 10% deposit. My credit scores are all fair to good, depending on the company (e.g. Noddle has it as fair/good but Experian has it as a high good). My question is whether it is worth looking into applying for a mortgage now or waiting until I’ve paid off more of my credit card debt and saved up more money not only to contribute to the deposit but for all the fees that go with it. My gut says the latter and to try this time next year but some people have told me to see what can be done now and not wait in case interest rates rocket and house prices, which are fairly reasonable in the West Midlands right now, increase. I wouldn’t be looking to spend more than £150k on a property but I don’t want to waste the time of a mortgage broker if I’m nowhere near being mortgage ready. Any frank advice would be gratefully received.

    Reply

  2. Hi, I have debts of around £25k of which £20k is in bank loans and £5k is on credit card. My partner has £50k savings. We wish to look into applying for a mortgage, but I can’t see past my debt. My credit rating is a high fair/low good as I never miss payments, etc. Paying my debt off with her savings isn’t really an option. Would a bank entertain such an application or would my debt need to be significantly reduced? Thanks

    Reply

    • That is a lot of debt, but what matters is how large it is in relation to your income. If you earn £100,000 a year the debt level matters a lot than is you earn £35,000. Have you tried using the affordability calculator linked to in the article above? That should show if you are likely to have big problems because of the debt.

      Reply

  3. Thanks for the reply. I earn £40,000 at present, but my wages tend to increase by £2500 a year. I will try the calculator above to see. Thanks

    Reply

  4. Hi My husband has 10,000 of debit on a credit card and 5k 0% interest free which we are slowly getting rid off. We have already been declined by our current mortgage lender for re mortgaging this was to borrow money for home improvements and pay off the credit card debit. We are now with a broker who has found us a mortgage with another lender and we have been pre approved what do you think our chances are to get this?

    Reply

    • I hope you aren’t mortgaging to pay off 0% debt… What interest rate have you been offered? How long a fix is this?

      Reply

  5. Hi, myself and my partner are looking to re-mortgage our home in March 2018, (application will start in January with our broker) and would like to release some equity for home improvements. We purchased the property for £232,500 two years ago and it is now valued at £270,000, our current mortgage left to pay is £180,000. I have paid well over the minimum payment on my previous cards to get them down in the last few months still leaving me with money at the end of each month. I have recently paid off my Halifax CC in September of £475 (awaiting for it to show as closed on credit report) – Paying off my NW CC of £757 in November and will have an outstanding CC balance on my other card of £700 by the time we apply for the re-mortgage. Do you think that we will be ok re-mortgaging with paying off my debts so recently? My credit score is good and so is my partners (he has no debts). My income is £18,000 and his is £27,000. Thank you for your help.

    Reply

    • I think it depends how much more you want to borrow – the amount needs to pass the affordability test and it will also be reducing the size of your deposit for the new mortgage.

      Reply

  6. Hi, I have debts of £18000, I am currently paying £50 a month too a debt management company, I earn £18000pa my family will loan me £20000, too pay a deposit on a £65000 property would I get a mortgage, also I am 55 years old, just the rent I am paying is £480 a month, and I want to leave something for my children, also would I get a 20year or 15year mortgage, please advise thank you

    Reply

  7. I have just found out that I have a default on my account for a £11 debt with Debenhams that I didn’t know I had as I had moved and the correspondence went to my old address and the direct debit that had been set up in the past didn’t pay it. The rest of my finances is absolutely perfect – wage >100k, no cc debts and over 60% equity in my house. I have just had my remortgage refused due to my credit rating even though I have just today paid the £11 as I gave just found out about it. Is there anything I can do to help me remortgage.

    Reply

    • I suggest talking to a good broker. You need a lender that will look at your case, not just say computer sez no.

      Reply

  8. I have £3.5k loan on account which i am payimg 45 a month on thats 10 years old and a car finance of 5k which i am paying now 100 a month that still paying off and just about to apply for morgage. I have a deposit of 10% 12,500 for a 120,500 property what are my chances of getting this??

    Reply

    • It’s going to depend on your income and other expenses – have you tried completing the affordability calculator that is linked to in the post above?

      Reply

  9. I currently on 24k a year and wife on 13k a year not many bills going out just normal gas electricity water council tax a car, credit score pf 758that good?? No outstanding debt or credit been reported on account

    Reply

    • It’s not bad. Do you actually have any credit,ega credit card or car finance? If you have none at all,it may be harder to get a mortgage… the best thing is traveling a credit card ad use it every month but repay in full each month, not leaving a balance.

      But if you are going to apply for a mortgage soon don’t apply for a credit card now as a new one damages your score for the first few months.

      Reply

  10. I earn £27000 a year plus £10000 a year in bonus and my wife earns £20000 a year so monthly take home is £3000, we have a deposit if £100000 mainly as a gift for a deposit only and not to be used in paying my credit cards balance if £13000. Were looking at a house of £300000 so only need a mortgage of £200000. Credit cards are allways paid each month well above the minimum repayment. Are we going to have difficulty obtaining a mortgage we already have an Aip.

    Reply

    • I assume both have great credit records. It will depend what your expenses are, you’ve been earning a lot but still run up 13k of credit card debt, so where has the money been going? I would hope you are Ok, if not you have to choose between a cheaper house and spending a frugal 6months blitzing your credit card debt down.

      In future, it’s a good plan for life to never spend your bonus, put half into savings and pay half off the mortgage.

      Reply

  11. Hi,
    Really need some advice here. I recently applied for a mortgage. Passed all affordability checks etc….. However, when my application was passed to the underwriter they found a marker. They told me this was from an old bank account I had and without asking me about it they said they hoped it was historical and they have asked to have the marker removed. I had a bit of a moment of madness around 12 years ago and went over my overdraft and didn’t pay all the charges etc….
    My question is what is the likliehood of them removing the marker and shouldn’t this debt be statue barred as it’s over six years old?

    Reply

  12. Hi just need some advice really, I have a credit card debt of about £4000, and some finance on catalogs, am looking at getting a mortgage with my partner in about 6 months time. Would it be best to put all my debts into one loan? I earn around 16k a year n my partner around 25k a year, we will have a 10% for the deposite on a £120k house by next year. And my partner as no debts at all. What do you think my best solution will be thank

    Reply

    • Getting a loan for 5k on your income with your existing debt may not be at a better rate. You need to work out the interest rate you are paying on all your debts – it could be very high on catalogues.

      Reply

  13. hi I have a ccj on my credit file for water utilities for £280. date on credit report says July 2012. this ccj disappeared from my credit file 2 years ago and now reappeared this month.
    the property address which I was renting is my friends and he can verify that I was never responsible for water utilities. due to shared property someone used my name.
    my question is why this ccj reappeared and when will this ccj disappear from my credit file as I’m planning to get a mortgage.
    kind regards

    Reply

    • When you get a CCJ this typically a few years after the default date of the original debt. from that point you will see both the original debt AND the CCJ on your credit record. The original debt drops off 6 years after the default date. The CCJ remains for 6 years from the judgment date of the CCJ.

      What I suspect has happened here is that the water debt itself dropped off in 2015 after an original default date in 2009, but the CCJ was in July 2012 so it is still there. the CCJ will then disappear in July 2018.

      You can check the details of the CCJ, including its date, by looking on Trust Online, see https://debtcamel.co.uk/do-you-have-ccjs/.

      Until the CCJ is 6 years old, the creditor (it may have been sold to a debt collector by now) can try to enforce the debt eg by sending in bailiffs. After 6 years the CCJ still exists but the creditor can’t enforce it without going to court and asking permission which is very rare.

      For a mortgage application, you will have to wait until the CCJ has disappeared.

      You can challenge a CCJ you don’t think you should have had, but you have to do this “promptly” – from what you have written you have been aware of the CCJ for a number of years so applying for a “set aside” could be difficult. See https://www.nationaldebtline.org/EW/factsheets/PDFs/12%20EW%20County%20court%20-%20how%20to%20set%20aside%20a%20judgment.pdf.

      Also it may be more complicated than you think to show you were not responsible for the water bill. Usually unless you had a tenancy agreement which specified that the landlord was responsible for the water bills, then all occupiers of the property are “jointly and severally liable” for the water bills – that means the water company can sue any of you for the whole amount. If you are thinking of trying to get rid of the CCJ talk to National Debtline on 0808 808 4000 first.

      Reply

  14. Hi I just need some advice. I have 2 CCJs on my credit file, one of them has a charge on my property and the other has been partially settled and the account closed with the creditor (although this is not reflected in the report). They are both for large amounts and I am planning to sell my property and use the money to clear the charges on the property and this will make at least 1 of the CCJs settled. The question is how realistic
    would it be for me to get a mortgage? I need to move and have been advised that due to the CCJs that many landlords wouldn’t let put their property to me so I am left with no other option but to sell my flat and buy a new property. I have a relatively good income.

    CCJ 1 -£4000+ (charge on property)
    CCJ 2 – £9000+ (partially settled and account closed)

    Income from all sources – just under £46,000

    Thank you

    Reply

        • So they won’t drop off your credit record until 2020 and 2021.

          The chance of you being able to get a mortgage except at a very high “bad credit” rate is very low I am afraid. I think you need to look at renting for a while if it’s essential that you move.

          Reply

          • Hi Sara,

            I am finding it impossible to find an estate agent in some instances they will not even take me on with a guarantor and was wondering if there is anything I can do in this situation.
            Thank you

          • but if you sell your flat, you should have enough equity left to pay 6 months rent up front. It’s usually not that hard to rent the n those circumstances.

  15. hi, i have no debt myself but my husband have debt of £4000.00 with bank he is paying £20 monthly. our earning at the moment is £30,000.00 a year. will i be able to apply for mortgage? my deposit will be £30,000.00.thank you

    Reply

    • £20 a month – is there a default on this debt on his credit record? How large a mortgage do you want?

      Reply

      • i have no idea what he is doing, but if i get a mortgage under my name is it possible? three bed around £410,000.

        Reply

        • No, possible, Bank don’t lend more than 3-4 , maximum 4.5 times annual salary, that is without any existing debt. 30k annual salary means max mortgage of £120k.

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  16. I have a DMP which has been running for many years, all the debt associated with it has gone from my credit reports. I’ve recently applied for a mortgage (I have a 25% deposit) and the lender has queried the DMP. I didn’t cross my mind it would be a problem because I’ve kept up with payments and have paid back all but eight thousand pounds (originally over thirty thousand). Can they refuse my application solely because of my DMP, I’ve worked so hard to clean up my credit record and I need a home for me and my children. The deposit is from my family and I’ve loaned almost the maximum I can realistically afford to pay, renting is more expensive where I live. Any advice appreciated.

    Reply

    • It is very unlikely you will get a mortgage in a DMP. Mortgage lenders don’t only care about your credit record, they care about all of your debts, and they can see your DMP from payments on your bank statements. See https://debtcamel.co.uk/dmp-mortgage/ which looks at your situation.

      Reply

  17. I have 4 defaults on my credit report
    1-37 months old
    2-29 months old
    3-26 months old

    And the most recent is 17 months old

    We have a £25k deposit and make 100k a year

    What are my chances of getting a morgage?

    Reply

        • One is for £69 from HSBC a closed account I didn’t even know I owed money on, I didn’t even have a overdraft

          One is to a DCA for 100

          FYI just accessed my CR for this wonderful surprise so I’m gonna ring and clear them ASAP

          Reply

        • Well you have no chance unless they are repaid, but getting them removed is much better! A standard rule of thumb is that some high street lenders don’t mind defaults if they are (a) over three years old AND ALSO (b) have been repaid for more than a year. I suggest you settle immediately any you don’t think you have got a good reason to dispute.

          Reply

  18. Not even with a specialist company? So the best plan would be to pay them off and wait for the defaults to fall off my report.

    Reply

  19. I was hoping someone can help ive had quite a few pay day loans in the last 6 years ( none in the last 12-18 months) Has anyone managed to get a mortgage with no problems having past pay day loans?

    Thanks :)

    Reply

  20. Hi I currently have about 15,000 worth of debt due to carrying out Work to the house we are purchasing off my father in law. I earn 28,000 a year my partner doesn’t work. My credit rating in 955 out of 999 which is high good. The property is worth 300 we have 10,000 deposit and are paying 126,000 for the property. Do you think that we will be able to borrow more on the mortgage to settle all my debts? As we have equity already in the property?

    Reply

    • As with all unusual situations, a lot is going to depend on the details. I suggest you should talk to a mortgage broker.

      Reply

  21. Hi Sara,
    I had a couple of which defaulted in 2012. These debts were both sold and I have been making monthly payments by Direct Debit for a couple of years now. These two accounts have recently dropped off my credit reports. When I submit bank statements as part of my mortgage application, these monthly payments will show and the names of the companies are well known. My question is, will they ask what those monthly payments are for and will that have an impact on my application? Thanks in advance.

    Reply

    • Yes you need to assume these debts will be spotted – they will gave the same effect on a mortgage application as two unpaid defaults would ???? They need to be cleared several months before a mortgage application.

      Reply

  22. Hi Sara

    My partner and I are applying for a mortgage but due to her having 2 late payments on a C/C in Oct and Nov we have had to go to a lender called that specialises in ‘risk’ appcations
    We earn 60k and 65k and applying for a 300k mortgage so we are more than capable of making the payments but my concern is how closely they will look into our spending. You see my phone bill was once 180 due.to some private calls. I’m concerned they will want to see my phone bill and ask about the calls

    Kay

    Reply

    • I have never heard of anyone being asked for their phone bill. However the lender may decide that you often spend that much and factor that into the affordability calculation. How large is your deposit? How much unsecured debt do you and your partner have?

      Reply

      • We have 30k deposit (10% that’s all they’d offer) from sale of our home (will make 63k profit)
        He have no debts at all, he has C/C be hardly uses it and clears it whenever paid.

        I have about 17k split on two C/C plus small amounts on store cards which we would be cleaing all of it woth profit from house.

        Profit plus some savings will cover all other fees etc.

        On paper to me we are easy decision we take home about 6.5k between us each month and outgoins would be about 2.5k, so was hoping for a simple decision

        Kay.

        Reply

  23. Hi Sara,

    I asked a question earlier in the year and I was wondering how someone rents with CCJs, every single letting agent in the area has informed me that I will fail referencing and cannot rent the properties on their books. I was wondering where I turn now.

    Sorry if this doesn’t relate to the topic.

    Reply

    • Renting directly, not through an agent, is one option. Getting a guarantor is another. It’s not easy :(

      Reply

  24. Hi, I hope you can help me!

    I have a loan of around £3500 that has 3 years left, and two credit cards both at a zero balance. My husband has a loan of £8000 which ends in 2 years and a credit card with £6000 with 0% interest on. We have a joint income of £60k. My credit score on Experian is 992 out of 999, and my husbands is 924 out of 999. What is the likely hoof of us getting accepted for a mortgage? We have only just started saving but we probably will only have a 5% deposit and not a 10% by the end of the year. We are first time buyers but don’t want to do shared ownership so we aren’t really taking that as an option!

    Reply

    • It depends a lot on how much you want to borrow! Have you tried the affordability checker linked to in the above article?

      Reply

  25. Hello advise please ,,i can got card bal. of £6,500, personal loan of £7,500 my annual income £18,000 ..my husband annual income of £30,000, he got personal loan of £20,000 and card bal, £5,000….we never try to aplly mortgage bec. of this debts that we got and we dont want to be refuse .how much likely we can have morgage ?

    Reply

  26. Hi, I entered my IVA in 2009 and made last payment in May 2016. There is no record of my Iva on my credit report and I’m no longer on the insolvency register. Will I have to declare my Iva on a mortgage application – I’ve already received an AIP. Are they likely to find out if I don’t tell them?!

    Reply

    • If you are asked if you have ever been insolvent or in an IVA you will have to reply Yes. It is always best to go though a broker in these circumstances, not direct to a lender – there will be high street lenders that don’t mind bankruptcy/IVA – provided of course that you have a deposit and meet the affordability criteria.

      Reply

  27. Me and my partner earn 20k each. We do have debt. We are moving back in with my dad to clear our debt. This will take 6 months roughly. Once that is done we will start saving for a deposit. I’ve just brought a new car (Feb) due to old car braking. (finance). How likely will it be to get a joint mortgage mid 2019. How long to they like to have debt clear? Looking at shared ownership to make it a bit more affordable in our area.

    Reply

    • What do your credit records look like? Have you tried using the affordability calculator, including your car finance costs, that is linked to in the above article?

      Reply

  28. I have a default on my credit history, due to bad advice from Santander, when handing my car back. On my credit it is due to be remover in December 2019. I earn 30K plus about another 30K in commission. I want to borrow 30k for a new house and put down 95k. My wife earns 18k
    We have 2 car on finance 2 credit cards, everything up to date. We can afford the additional payment. What are our chances

    Reply

  29. Hi me and my husband are looking for buy a property for 220 k. We both earn 45k combined. We have more than 10% deposit. Credit ratings good. My own worry is he is paying 3 seperate companies for debts he had many years ago. No defaults on his report. It’s a combined two thousand pound. Could this stop us getting a mortgage? We can only go with nat West because of Our childcare
    Thank you

    Reply

    • “We can only go with nat West because of Our childcare” why is this?

      If you have a good deposit, why not simply repay these old debts?

      Reply

  30. I am looking at getting a mortage with my partner. He has had debts in the past but these have been paid off for over a year. I currently have my own mortage and he pays rent on a monthly basis.
    We both work full time.
    Over the past six months we have been saving in a joint account for a mortage and have been putting an equal amount in each month. I am concerned that we wont be able to get a mortage together due to his credit rating/score.

    Reply

  31. Hello,

    Just stumble across this website,reading through all the comments here make me feel like am not alone.

    Here is my case,wife has got a mortgage which she took out with her ex husband.the house property was bought 10 years ago for 172k but they’ve since divorce and am now marry to her.the house is now worth 200,000 with a balance left to pay on the mortgage of 90,000 or 85k by the time we re ready to remortgage.we re planning to remortgage on the house and also change ex name to my name.we have plan to go on interest only to clear all our debt which we have done and back paying full mortgage now every month.what chance do you think we have in remortgaging on the house please.

    Thanks in advance

    Reply

    • Whether the mortgage company will agree to taking his name off the mortgage and substituting your name may depend on your income and credit rating. The chance of a switch to an interest-only mortgage is not good.

      Reply

  32. Myself and my husband are looking to apply for a mortgage. We have a 5% deposit saved so going for 95% mortgage over 25 years. He is 45 and I am 42. I’ve had debts in the past, over 8 years old, linked to ex husband. I’ve since remarried and obtained credit report with my current name and maiden name and past addresses for 6 years. It’s show a default that is paid of £280 which was due to a dispute delaying payment to BT but paid Feb this year. I have other debt that is not showing on the credit report of £22,000 total. One was due to selling in negative equity thrum divorce so paying off and other an old Argos card which I’m making regular payments for both but aren’t showing on credit report. I earn £23,600 p.a and hubby earns £29,000 per annum. My husband has good credit history and no debts apart from car loan paying month
    Y. Is it likely we will get a mortgage through mortgage lenders off or on the high street? We have a mortgage broker and she has done affordability test and seems to think all ok for affording mortgage.

    Reply

    • Have you told the mortgage broker about the old debts? Brokers can’t really help if they aren’t given the full picture.

      Reply

      • We’ve a meeting next week when I’m taking in my paperwork re old debts. One of which I’m still paying monthly instalments but doesn’t show on credit report as prob related to an address I was at 10 years ago. I was left with negative equity balance to pay after divorce as ex husband went bankrupt so didn’t have to pay. Dya think we can still get a mortgage based on earlier query with this info? Many thanks for replying.

        Reply

  33. Hi

    Looking for advice for myself and partner with regards to securing a mortage.

    Our situation :
    Partner has 3 defaults on her account, unpaid, we tried to contact them to pay them off but weren’t able to as they either couldn’t find the account information (gas and electric company) or the money was written off (catalogue company)
    The defaults will be 6 years old in December and should drop off credit report in January I suspect.
    My partner has no other credit history at all.

    We will have around a £15000 deposit and looking to go up to £120,000 for a house. So a mortgage of about £105,000
    My partner is 53 years old, 54 this year.
    I am 48, 49 this year.

    I also have a credit card at currently £2150 and car finance of £193 per month which will end in Oct 2020

    Would I be better paying off the car finance to get rid of the £193 per month payment, this would mean a lower depost of around £11,000

    Or leave the car finance as is and have the larger deposit of £15,000

    We are looking to apply in Mar-May next year (2019) once the defaults are gone.

    Thank you for your help

    Reply

    • Just to add, that the mortgage term would be 10-11 years due to partners age, and around £950 per month

      Reply

  34. Hello,
    We are looking for to buy a house in the next 6 months. (Joint mortgage) my husband will be a first time buyer and I’ll be a second as I’ve previously sold a property. My husband has no debts, at the time of purchase I’ll have around £3K left on a personal loan and about 18 months left on it. Our combined income is about 35K. My credit score is rated as good on Experian (920 out of 999) How likely are we to get accepted for a mortgage with the current debt that I have?

    Reply

    • That doesn’t sound like a big problem debt but what matters is its affect on the affordability calculations. There is a link to an affordability calculator in the article above – try using that.

      Reply

  35. Intrigued to know how future lenders see Payday loans – Do they take a dim view?

    Also is they do, is there a way they can be removed from your credit file if they’ve been paid off?

    Reply

  36. Hello,

    Looking for some advice please. Me and my partner are looking to buy our first property on the help to buy scheme through the government. We have the 5% deposit and the other 20% will come through the scheme. My credit score is 967 – Excellent, I have £3200 on a 0% credit card which has a limit of £3500 which I am reducing by £100 per month and £4500 on another 0% card that has a limit of £5000 which I am paying £250per month to clear. My annual income is £45000 with an average of £3000 per year in bonuses on top. My partner’s credit score is on Fair however he is currently into his overdraft by £1500. he has no other debts and earns £43000 per year.

    How likely are we to be accepted for a 75% mortgage of £178,875?

    Any help/advice you could give me would be appreciated.

    Reply

    • I think you should be fine – assuming your partner hasn’t got defaults or missed payments on his past credit history (? why is it only Fair?)

      I will say that you two seem to have a LOT of debt for a couple with excellent incomes. A HTB mortgage seems like such a help but you really need to be trying to overpay it as much as possible so at the end of the 5 years you are in the best position going forward to remortgage to pay off the government’s share.

      Reply

      • Thanks for the reply. I’ll be honest the 4.5K is a loan that I took out for a friend who was in some trouble. She’s putting the £250 into my account every month and I’m paying it off. Would the mortgage company take that into account as they will see on my bank statements that the £250 is coming in?

        Reply

  37. HI wondering if you help,

    My husband and i are looking to buy our first house for about £330k. we have 10% depoist
    i earn £42k, and he earns 39k. we have two children where we have ot pay nursery fees of £1000 a month which should come to an end in september.
    also we have debt of £25k. our credit history is good. would we have a chance of getting a mortgage.

    thanks

    Reply

    • Have you tried using the affordability calculator linked to in the article above? It’s not only the absolute value of your debt that matters, also what it is costing you.

      Reply

  38. Just after advise.

    Is it worth to try to get on ladder or its no chance at the moment:
    Earning – £24720 (Plus bonus & other income around 2k per year)
    CC£4000 (paying £100)
    CC2 £5000 (paying £150)
    Overdraft 2k
    loan 227£ (around two years left)
    gifted 10% deposit and house value of 65k
    Credit score good, never missed any payments
    Thank you

    Reply

    • That is a lot of debt… have you tried putting the figures into the affordability calculator in the article above?

      Reply

  39. My mother was recently diagnosed terminally ill and lives abroad. My daughter and I spent every spare penny we had on her medical care and more making sure she was comfortable. But before all this I was about to buy a house, right to buy and clearing all outstanding credit cards one at£4500 and other£1650 and a catalogue £1300. Mum passed and my daughter and I need to scrap £2000 together the easiest way due to bereavement/depression is a personal loan, I was also thinking loan up to £5000 and clear the card and catalogue too would this help (monlthly payments would reduce slightly) , should I avoid the loan-I do have enough for one flight only/mine. Right to buy is time sensitive I think I have around 5-6 months

    Reply

      • Hi Sara-the loan is with Live Lend (is this good) and the interest is 13.5 % for the £5000. is

        Fortunately I had in credit card and gift from son and self around £7000 so the £5000 loan would just make repaying the credit card seems cheaper and my finances abit more manageable after bleeding money but would change a thing. I will delay the application by 6 months and have inherit a 1/3 share on a house and 8 acres which will be sold but it is when.

        Reply

        • Sorry the £7000 is what I spent-I just spent another £1500 for plane tickets so need advice and help obvious a one off situation

          Reply

  40. I defaulted 10 years ago, The defaulted account dropped off 4 years ago. There is no trace and my credit file is clean. I paid a lower amount to a debt collection agency each month for years and paid off the debt in full two years ago.

    I am concerned as I understand that on a mortgage application I will be asked:

    Have you ‘ever’ defaulted?

    Do I have to declare it if it’s ovef six years old and if I do am I likely to just be rejected anyway?

    Reply

    • “Have you ‘ever’ defaulted?” You need to answer any questions on a mortgage application truthfully. In your case, I would not expect any lender to care about a default that is 10 years old which has been repaid for two years. The lender will be able to see from your credit record and bank statements that you don’t have recent problems.

      Reply

  41. We are due to remortgage in Jan 2019 and we are trying to fix in the rate now. My husband earns a good salary of £130,000 and I have a small wage of £10,000. The big problem is that he had a lot of debt when we first met and it has gotten bigger and bigger – to the sum of £68,000. We spoke to First Direct and they just refused us a mortgage based on his debt. we both have good to excellent credit scores and we never miss payments. All the debt is on 0%. We wanted to take out an additional sum to pay off all or most the debt then put what we would have been paying off into a savings account and use that to ‘over pay’ the mortgage. Question is do we go direct to the lender or broker? We don’t want lots of credit searches on our files and we also do not want to go with our current lender as the get out % is too high and the SVR is not what we want to go on to.

    Reply

      • We bought our house for £669500 5 years ago. The estimate value now is £866,000. The mortgage we have left is £455,000 but we are asking for either an extra £40,000 or £60,000 for the new mortgage.

        Reply

    • Look at this from a mortgage lender’s point of view. You two have been running up more debts even though your mortgage is only 455k. That suggests that you are spending too much for your income. If they give you a larger mortgage, you may well continue spending more and run up the credit cards again…

      Also if you remortgage with a different lender now, you will still have to pay the get out fee to your current lender.

      So, I suggest you give up on remortgaging at the moment and set about overpaying those credit cards by as much as possible before February. Any that you clear, close the accounts. This will reduce your debts and show the lender that you can do this. Have a VERY frugal 6 months and a minimal Christmas – no holidays, cut down the eating out and entertaining.

      Reply

      • Just wanted to give an update on our mortgage situation. After being declined from First Direct we then approached Coventry Building Socity. Again passed the credit check and affordability, however it was sent to the underwriters due to the large sum of debt. The underwriter again declined the application due to us not asking for enough extra to pay off the debt. We then appealed against the decision with a letter and a spreadsheet showing debt and our savings and we also added more onto the mortgage to cover the whole amount of debt. The underwriters came back with a yes! We have just completed all the paperwork and the new mortgage will kick in early next year when our 5year fixed finishes. I know it’s not a good situation to transfer debt into a mortgage, however the debt will be paid off and we can over pay our mortgage (we have checked this) from what we have been paying out every month. I just wanted to give a little hope to those in a similar situation to us, that you can get a mortgage and it is worth appealing in writing. I will add that over 2 months we had cleared a good few thousand of debt as well. We look forward to cutting up cards and cancelling them all!! Thanks Debt Camel for your advise

        Reply

  42. Hi I have around £18k debt between a credit and loan. My partner bought a house 7 years ago in London and we both live in this now which is a 1 bedroom flat. We just found that my partner is Pregnant and due in March. So we need to move before she gives birth and also with Brexit looming. We have had the flat valued and advised that she should make £185,000 from the sale which will be going as a deposit on a new property in the region of £350,000/400,000

    I am currently on £26k a year and my partner is on £35k and she has a perfect credit rating. My Credit rating is showing as Fair. I am obviously worried that this may affect the mortgage application. I have previously paid just the minimum on my credit card but for the next few months prior to the application i am paying triple the amount of the minimum and was wondering if you could advise me how i stand

    Reply

    • Why is your credit score only Fair – is it just because you have borrowed too much or because you have late/missed payments or defaults showing?

      Reply

  44. Hello
    My partner and I are looking to buy our first home together, we have until February before our tenancy is up on our current rented property.
    We have 20k deposit and house is 180000k.
    We have no debt on cards/ loans etc.
    I have one default on my file from over 4 years ago that I have just finished paying for of £720.
    Is there any chance we would get a mortgage or should we find somewhere else to rent?
    I earn 17500k and my partner 23000k.
    Thank you.

    Reply

  45. Hi

    Hope you can help

    My Husband and I are looking to apply for a mortgage in Feb 19 – our mortgage trigger date for a new build we have reserved. Our combined income is £60k, so sufficient enough for the mortgage we require and we each owe around £500 on credit cards as we have cleared everything right now. A family member took out a catalogue debt in my name, I settled this early 2016 because it was pointless disputing, however I have just checked my credit file and have seen that this actually defaulted in April 15. How much will this impact our mortgage application? My noddle credit score is fair/excellent 4/5, Experian has the same data and is poor? all of this is quite confusing!!!

    Reply

    • As the default is over 3 years ago and it has been settled for more than two years, you shopuld be able to find a mortgage at an OK rate from a high street lender.

      Do go through a broker though, not direct to a lender.

      Good luck.

      Reply

  46. We currently own our house outright with no mortgage, it is worth £150000. We have around £35000 dept , £17000 of which is an unsecured loan and the rest is credit card. We want to sell our house, repay the depts and put £100000 down as a deposit on a £200000 house, would mortgage lenders understand that our current dept would not be there and give us a mortgage. We earn £25000 each a year and would essentially be dept free when we move apart from hopefully new mortgage

    Reply

      • Home improvements, we brought a caravan for holidays, cars and one of us was self employed but got sick so couldnt work for 9 months

        Reply

        • It will depend on the details of your affordability. If one of you is still self employed, that could be a problem as you will need several years accounts showing your income. You need to talk to a good broker.

          Reply

          • Thank you, we are both employed now rather than self employed and have been for a couple of years

  47. Hi there….looking for some advice, me and my husband are looking to get a mortgage October time..me having some debt of around £13000 ….which I’m planning to reduce down …..I should have it down to about £3000 by October…..Will I still get accepted for a mortgage….. between the both of us our annual income is around £32000…..thanks

    Reply

    • That is a big reduction in your debt which should help with any mortgage application.

      But it isn’t the size of the debt on its own that matters – it is what shows on your credit history, how large your deposit is and how affordable the mortgage will be.

      There is a link to a mortgage calculator in the above article – use that with the 3k level of debt and see what it says.

      Reply

  48. Hi Sara, my partner and I are looking to purchase a house this summer. He has a perfect credit score but due to my credit utilisation (I think) mine is 918 with Experian and 386 with ClearScore.
    Me –
    £1500 and £800 owing in two arrange overdrafts with banks (from university nearly 10 years ago) — – £3k on a credit card (currently paying back 150pm in order to clear ASAP)
    – £5k remaining on a car hire purchase which will be cleared by the end of May.
    I am due to receive approx £14K this summer due to maturity of share scheme.
    My income is £60k+ And we have a combined income of £105k

    We want to start looking at houses and thought an AIP would give us a good idea of what we can afford. Will be debt hinder us if we do this now? It’s frustrating as I know that all of my debt will be paid off by August.

    Thank you

    Reply

    • if you have a combined income of 105k a year, I am surprised you can’t clear those debts rapidly, have you not been saving for a deposit?

      The Experian score is fine but you need to look more closely at what problems are showing on your Equifax/ClearScore record.

      Reply

  49. Hi, I have a history of late payments on a mortgage that is now fully piad up and closed. The amounts are all classed as 1’s on my credit report and over 3 years ago. We are hoping to get a help to but property and the agreement in principle says we can borrow over £80k more than we need. I applied with the Halifax who I held the mortgage with that fell into arrears. I have had other credit with them since, some paid in full and a credit card that we use for joint expenses. My credit file has been immaculate for the last 3 years and I also have a car on finance which all payments are up to date. Do you think the application will fail at full application? They have given us an A2 credit rating on the AIP.

    Reply

      • Hi Sarah,

        No, but my wife wanted to go directly through the Halifax as she has used the advisor before and her current mortgage is with them and we both bank with them. The mortgage we would be looking at would be 74% ltv with a help to buy.

        Reply

  50. Have just been rejected for new mortgage.
    Have default unpaid which is due to drop off
    In Dec 19. Have sold my current home and have told my bank that I will pay default as soon as i receive the money. Me and my partner have affordability but my partner took out finance recently on new car in addition to a few late payments and then my default. Is there any lenders that will look sympathetically at me applying in my own right either by ensuring default is paid immediately given this is the only blemish on my record and I have affordability to make mortgage application on my own.
    Obviously my credit score is poor due to default and not been borrowing

    Reply

    • You need to talk to a good mortgage broker but there may not be any options for a mortgage at a reasonable rate. The normal rule of thumb is that you can get a mortgage from some high street lenders at an OK rate with a default showing on your credit record IF it is over 3 years old (your is) AND IF it has been paid off for more than a year (your hasn’t).

      You should hesitate to get a “bad credit mortgage” even if the broker assures you that you will be able to remortgage to a better rate after 2 years. This may not be possible in 2 years time, then you are stuck with a very expensive mortgage.

      A better option may be to rent until January 2020 when the default will have vanished and the debt will have long been repaid so it will not be visible on your bank statements either.

      Reply

      • Thanks Sara. So say I decide to rent until the default drops off . Is it necessary to repay it if it dissappears before I reapply ?

        I am looking to borrow 125k with 30k deposit does that still mean a bad credit mortgage of I chose to go for it will still be crippling? I have a deposit on a new build and a small child and do not want to move to move again as rentals a few and far between as it is a small country town

        Reply

  51. Hi, we are looking to move house and we have debts of £35,000 which we plan to settle once we sell our house. We brought our house for £250,000 remaining mortgage is £225,000 and house is worth £535,000. Would we be able to get a new mortgage with the debts even though we will settle once sold house?

    Reply

    • It depends on your affordability for the larger mortgage – the lender may be worried that your borrowing showed you weren’t really managing a smaller mortgage well – and what your credit record shows. Sorry you need to talk to a mortgage broker who can look at your full situation.

      Reply

  52. Hi Dear,
    Just after advice pls. I have a card card debt of £6000 paying around £130 monthly and personal loan repayment of £266. Never missed payment. My annual income is £32200 and thinking of a flat of around £110k. Wondering if I stand any chance with getting a mortgage or to forget about it all together. Many thanks.

    Reply

    • Do you have a deposit? When does the personal loan end? Are there any problems on your credit records?

      Reply

  53. Hi
    I’m quite embarrassed and I really could use some guidance please.
    Myself and my wife have an Experian credit rating of around 200. We both have defaults, late payments and 1 CCJ each (outstanding but being paid) We have both got our finances under control and would like a mortgage. We would like a house around £200-£240,000 we will have a deposit of about £100-£120,000 which will be gifted by a parent. What would be the best way forward to get a mortgage?
    Thanks in advanced
    Simon

    Reply

    • what are the dates on your CCJs? on your defaults? what is your combined income? how large are your outstanding debts, not just the ones with problems, all of them?

      Reply

      • Hi.
        Both CCJ’s are 12-18 months old and are currently being serviced by monthly DD and should be paid within 12 months. Combined Annual income is £50,000 all O/S Debts totalling £10,000 (including CCJ’s) £6500 of which are Debts being serviced that have no defaults on.
        Thanks

        Reply

  54. Hello there, I really need some guidance. Due to my debts I had to take DRO last year. The morotorium period ended last month. We live in a council property and my wife has saved up some money for mortgage. With her salary alone it won’t be possible to apply for right to buy. As DRO only ended couple of weeks of ago, would I get a mortgage if we make joint application. My wife has clean credit history. Would the debtors chase me again if i try for joint mortgage? All my debts where related credit cards and over draft.Please help.

    Reply

    • You may have trouble getting a mortgage so soon. For a normal mortgage this would not be worth trying for, but RIght To Buy mortgage’s are a specialist area so talk to a broker now about when a mortgage application including your name would be possible.

      Actually don’t do this right away, first double check that your credit records are now correct for your DRO having finished with all three credit reference agencies. See https://debtcamel.co.uk/repair-credit-record-dro/. This can take some time to sort out and you want that done before a broker looks at your credit records.

      If you do get a mortgage there is NO danger of your old DRO creditors popping up again.

      Reply

      • Hi Sara, I have checked my credit score on all three credit reference agencies and everything shows as settled and no outstanding debts on any old debtors. Also, all three credit reference agencies shows DRO status as discharged. Do you think it is safe for me to approach a mortgage broker who deals with poor credit record? Many thanks

        Reply

        • Well all the mortgage broker can do is say No, so it’s “safe”. You need to be talking to a brkoer that specialises in RTB mortgages.

          Reply

  55. Hi there,

    Looking for some reassurance. Myself and husband had an offer accepted on a property of £70,000 and will be putting down a deposit of 5%. Our combined earnings are just under £60,000 per annum and our broker has secured us a DiP for up to £250,000. We have however, only just noticed that my partners credit rating has taken a bit of a hit due to him using his credit card recently. This hadn’t registered on his credit report until now, despite him using it before the DiP was issued. We have no issue paying it off and are making well over the minimum payments required. It was simply for convenience purposes, nothing more. He currently has £600 on the credit card as well as an overdraft of £400 (again, no issues paying it off, just didn’t expect to be putting in a mortgage application so soon). We also have relatively new car finance although we pay it every month on time, no issues there. In fact, between us we have never missed payments on any of our accounts however despite this, his credit score is now only considered fair (due to the recent credit card usage) and we are very seriously worried that we will now be rejected in our mortgage application. Given our circumstances, do you think our debt is too large to be accepted for this mortgage? The wait is excruciating now that we have realised this.

    Reply

    • Is the property value of 70k correct as the mortgage and deposit figures don’t seem to make sense.

      Reply

      • Hi Sara,

        The property value is £70,000, and we are putting down a deposit of 5% (i.e. £3500) so we are in the middle of applying for a 95% LTV.

        Reply

  56. hi I earn 28k year ive had 4 credit cards about 2 yrs ago and I went on max on them and I could not afford pay them off they are on my credit file as not been paid off , ive been renting private for last 10 years and never missed rent payments , im looking into getting shared ownership will I qualify as I got money to pay deposit on the mortgage .and after 6 years if they not payed off will they be removed from my credit file.

    Reply

    • Are these credit cards marked as defaulted on your credit record? If yes, what are the default dates on each of them.

      Reply

    • I looked on credit score they are about 2017 and 2018 they don’t say default just gone to debt companys and say closed .

      Reply

      • The accounts have not actually been closed, they have been sold to a debt collector. The debt collector will add new records – you need to find those and see if they are defaulted. Are you looking at Clear Score? If you are, that only shows you Equifax data – you also need to look at your Experian and CallCredit data – see https://debtcamel.co.uk/best-way-to-check-credit-score/ which explains how you can check these for free.

        If the debts are defaulted, they will drop off your credit records 6 years after the default date – that’s why you need to know what the default dates are.

        BUT you are going to need to settle these debts if you are to have a chance of getting a mortgage in future. You can’t ignore them – if you get a CCJ that will ruin your chance of a mortgage for another 6 years. Also when the debts have been settled for at least a year, you may be able to get a mortgage. But with unsettled debts with a debt collector, no, you can’t get a mortgage. Your best hope is probably to use some of the money you have for a deposit to try to get full & final settlements on the debts. do this now, so they are settled asap so when you have resaved the deposit money, the debt problems look like they are well in the past.

        Reply

  57. I do not have any kind of debt,I work full time and have a deposit saved,this will be my first mortgage,would I be accepted to get a mortgage?

    Reply

    • It will depend on your income and the amount of the mortgage – do try the affordability calculator linked to in the article above. Also check your credit records with all three credit reference agencies to make sure there are no problems – don’t assume!

      Reply

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