Loan & mortgage advice?

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Can anyone offer me some advice please? Myself and my partner are thinking of looking into the possibility of getting a mortgage in the next year or so.

At the minute we are trying to get our finances in some sort of order. As yet we have no savings but are planning to start soon.

My partner has recently just cleared an existing credit union loan and has a small bit of credit card debt.

Myself on the other hand I have quite a bit of debt. Credit union loan, bank loan and credit cards. I know this is unwise and foolish.

What i was going to look in to doing was topping up my credit union loan to pay off the bank loan and credit cards and over the coming months pay off as much as possible from the credit union loan to get it down.

My question is that if we did apply for a mortgage, would the mortgage company want to know the reason for the credit union loan and would this go against me?

Any advice greatly appreciated.


  1. Reply
    Angry Bird
    April 12, 2012 at 1:01 pm

    Grab your car keys: You are going to visit a library or a bookstore.
    I want you to look for a few books (one each visit).
    Personal Finance / or how to set up a budget
    How to buy your first home
    Mortgages explained.
    I’m not sure if these titles exist – but you get my message.
    Debt will directly reduce the amount of home mortgage you will qualify for.
    Get rid of credit card debt first, since revolving debt hurts credit the most.

  2. Reply
    April 12, 2012 at 1:51 pm

    Forget the loans how do you expect to get a mortgage without a deposit. You say you have no savings – It’s going to take longer than a year to save for a deposit and other fees you will need to buy a house. Concentrate on paying off your loans more quickly before considering buying a house.

  3. Reply
    Kernow Lady
    April 12, 2012 at 2:23 pm

    Firstly you need 10 to 20% of the asking price for a deposit. A lender will want to know everything about your financial history. They will be able to see quite easily what you have been doing on your credit report.

  4. Reply
    April 12, 2012 at 2:36 pm

    Forget applying for a mortgage until you are in the black
    you are totally in the red at the moment ,with various unpaid loans etc
    get these cleared and start saving a deposit, usually between 10-20% of the price of the house
    Anyone considering lending to you will look at all your outgoings and that includes all your loans and debts
    SAdly you don’t mention what you or your partner earn or what savings you have of any
    not do you mention what collateral you have

  5. Reply
    Paul in San Diego
    April 12, 2012 at 3:13 pm

    You need to get ahold of a mortgage broker or lender (bank) to get preapproved for a loan. This is where they run your credit, and have you list all of your sources of income and debts, and they determine how much of a loan you would probably qualify for. They won’t charge you anything to do this, because they would have to do it anyway if you were to decide to take out a mortgage with them.

    But, from what you have said about your situation so far, I would imagine you wouldn’t qualify for any kind of mortgage. Especially since you wouldn’t have any money for a down payment.

    And, as far as all the debts are concerned, it doesn’t really matter how much you had as a balance of the individual debts as much as the total debt you have. That is, having 3 credit accounts for $ 3000 is the same as having one account for $ 9000, as far as determining your debt-to-income ratio.

  6. Reply
    Moon Thomas
    April 12, 2012 at 3:20 pm

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  7. Reply
    April 12, 2012 at 4:10 pm

    Its certainly sensible to clear the expensive (card) debt with the credit union loan if you can do that;
    Just cut up the card(s) NOW so that temptation is removed, and don’t skimp on repayments just because the interest is lower.

    Oh, and start keeping track of where your money goes. They may ask about reasons for the the loan, but it will help your application if you show some control.
    It’s pretty depressing when you tally it all up and realise your net worth day after payday is -2000, but it makes it worth it when your net worth becomes +2000 the day before payday.

  8. Reply
    General Knowledge
    April 12, 2012 at 4:54 pm

    In direct answer to your question which is about three quarters down from the top, NO, the mortgage company will NEVER ask you for the reason for the credit mortgage loan. It is not their business to ask people why they have taken out any loans.

    As long as you and your partner have a sufficient amount to put down for the cash deposit required for a mortgage, the bank will consider your application. That is assuming that your two salaries will easily cover the mortgage after all of your loan and credit card repayments.

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