loader image

Mortgage advisers & Protection

Get in Touch

Can You Get a Mortgage With Outstanding Debt?

Seeking mortgages can be a tedious task for anyone, but for those with outstanding debts, this process can be made much more difficult. But do not despair – it is still possible for you to borrow, even with outstanding debt. This article will provide some insight on how debts can affect your mortgage chances and what you can do about it. 

Mortgages With Debt

Life throws out many surprises, causing unavoidable payments for emergencies, repairs and similar situations. Running up a debt in these situations is a common theme, as large payments and fees usually occur. This can cause worry, as you may assume that carrying debt will put you in a weaker position for a mortgage. This begs the question – would a bank want to lend money to those borrowing from another service?

Simply put, having outstanding debt may not necessarily stop you from getting a mortgage. Although, the amount of debt requiring payment will most definitely have an influence on how much you can borrow.

How a Mortgage Lender Views Debt

A common belief amongst home buyers and homeowners is that any form of debt will ruin their chance of being approved for a loan.

But, in reality, mortgage lenders have a process that covers a number of factors. Mortgage lenders will take into consideration the debt you have, the circumstances around the debt and how it affects your overall financial health. 

What If I Pay Off My Debts After Getting a Mortgage?

If you formed a plan on how to pay off your debt in full, before or after buying a property, banks will form an assessment. Banks may be willing to take your payment plan into consideration and form an affordability assessment. This can potentially give you the possibility to borrow more than before. Doing this, the bank may even note this as a debt condition for their mortgage offer.

Steps To Take Before Applying For a Mortgage

If you have debt, it will be essential to come up with a plan before seeking a loan. This is likely to improve your chances with brokers. Some factors you may want to consider are:

  • Close unused credit card and loan accounts
  • Pay down your debt as much as affordably possible, bringing down your credit utilisation rate and debt income value
  • Build up your credit history with regular payments
  • Use a specialist lender – Lenders like Peak Mortgages are more flexible on affordability assessments and credit histories
  • Be honest with brokers when going through the mortgage process, it will benefit you in the long run

Contact Mortgage Experts Today

Peak Mortgages have aided numerous amounts of people to secure a mortgage, based on their specific needs and requirements. Our experts are specialists within the industry and their respective field, applying their knowledge to help those in various circumstances. Contact our mortgage experts today.