Can I Get A Mortgage With Debt?

It is the biggest debt of all for most people – a mortgage. However, many worry that if they already have debts, then they may not be in a position to be accepted for a mortgage. Moolr have taken a look therefore a a common question. Can i get a mortgage with debt?

There are multiple factors

The simple answer to the original question is yes. you can most definitely get a mortgage with debt. Most people have debts in their life, and it is not a barrier to getting further finance.
Mortgage lenders assess in detail whether a loan is really affordable for the borrower. A few years ago, lenders only looked at the size of your deposit, your credit rating and your income. Nowadays, the lender assesses whether they are comfortable with you making the mortgage repayments. . Your debts are an important part of this. This includes credit card repayments, any bank loans, car finance payments, the size of your overdraft and more. The mortgage lender will compose a wide picture of your capabilities to have a mortgage.

A large deposit helps

With a large deposit, a bank/lender 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. The reasons are fairly obvious. Raising a deposit shows your capability to save money and handle your finances well. And naturally, the bigger the deposit, the smaller the mortgage repayments will be. The smaller the total amount repayable too of course. A small deposit is not a deal-breaker, but having a bigger one certainly helps. Do not borrow to get a bigger deposit though. This is a false economy that will only cost you more money in the long run.

Have all your details ready

Lenders will want to know plenty of details regarding your finances, as alluded to earlier. So it’s god to have done your research and have all your financial details ready to present to a prospective lender. Lenders used to use your income as the main guide, but nowadays they delve into more detail.

How debts affect the decision

A bank or lender will of course take a look at what debts you have. If your debts are low, there will be little concern. Regular repayments and a good credit score will only lower any possible concern further. You need to carry on and make sure your credit record stays clean until your house purchase is complete.
If you know you are struggling to make debt repayments, the mortgage lender is likely to see that. You are very unlikely to get a mortgage. You need to spend a few years getting your debts down to more easily manageable levels. Also, If you are in a debt management plan you are also going to find it difficult to get a mortgage. High-end debts or past problems such an IVA or a Debt Relief Order (DRO) , especially within the last 6 years, means you won’t be able to get a mortgage or remortgage however large your deposit.

Credit Scores

A good credit score is very important, vital even. A good score shows you to be trustworthy to a prospective lender. Missing repayments does the opposite. Defaults like this tend to stay on your report for six years. If your score is not good enough to get a mortgage, you need to be patient. Make regular repayments, improve your score, and wait for any defaults to drop off your report.