reduce loan repayments before applying for mortgage?

L

lingling

Guest
myself and my boyfriend are considering applying for a mortgage. we earn a combined income of around 95k and i have a permenant public sector job. we are looking at a property thats 250k and we have some savings and a gift to cover the deposit. we are paying 700 p/m rent at the moment. the problem is my loans, i have 2 loans that total 18k. they will both be paid off in 2 years time but the repayment are seriously reducing my disposable income, especially now my pay has been cut. so i was thinking i should reduce my repayments by stretching out the length of the loan, but i dont know wheather that will look good or bad when applying for the mortgage? or do we have any hope getting a mortgage at all with my loans? i also have a credit card that i owe 4k on although i dont ever miss repayments and both of us have good credit ratings.
 
You may be told to have all loans / credit cards cleared before you can draw down .
I was .
 
I would have said to *increase* repayments on the loans, rather than decrease them. An increased repayment record, even if it's for a limited period, will stand you in better stead with a mortgage provider.
 
lingling said:
so i was thinking i should reduce my repayments by stretching out the length of the loan, but i dont know wheather that will look good or bad when applying for the mortgage
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lingling,

If you reduce the loan repayments, your net disposable income will increase. The higher your net disposable income, the better your repayment capacity so this will be a positive in the eyes of the lenders.

On a combined income of €95k you may be able to run the two loans as they are as well as take out the new mortgage of €230k but it is impossible to say without knowing the monthly repayments on the loans.


www.moneybackmortgages.ie
 
thank you all for your respones. in relation my repayments,i am paying back 430p/m on one loan and 300p/m on the smaller one. i also save 200p/m and pay my rent which is 350 each p/m. but with my recent paycut thats leaving me fairly tight now. in saying that i am due on incriment in march which should put me up at least 150 extra p/m, and i am guarenteed to get that incriment. i will be getting incriments every year for the next 7 years too i dont know if that will make a difference?
 
If he has no loans, then your joint salary will support the new mortgage and your existing loans.

lingling said:
in saying that i am due on incriment in march which should put me up at least 150 extra p/m, and i am guarenteed to get that incriment. i will be getting incriments every year for the next 7 years too i dont know if that will make a difference?
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See


www.moneybackmortgages.ie
 
It my opinion it would be completely irresponsible to reduce your loan repayments, thereby increasing your loan term, in order to facilitate yourself in taking on another loan.

You say you've 4K on your CC and never miss a repayment, but what exactly are you repaying - the minimum payment?

Stop taking on more debt. Stop putting 200E away each month in savings. Clear your CC completely. Apply for a mortgage in 2 years when your other loans are cleared.

Answering the OP's original question in the narrowest sense by saying
If you reduce the loan repayments, your net disposable income will increase. The higher your net disposable income, the better your repayment capacity so this will be a positive in the eyes of the lenders.
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is all well and good but - trying very hard to stay within the posting guidlines here - a Mortgage Broker may well tell you how to get finance but will offer no guidance as to whether it's appropriate to your circumstances.
 
If you are stuggling right now how are you going to be able to cope with a mortgage unless the mortage is equal to the rent you currently pay and that would signify you getting a mortgage over a very long term.

Why don't you use your savings to pay back your 3 debts?

If you're in a permanent job why on earth would you be paying interest on 3 debts when you have a spare 200 to reduce the debt.
 
Howitzer said:
a Mortgage Broker may well you how to get finance but will offer no guidance as to whether it's appropriate to your circumstances.
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Really?

In the real world what a mortgage broker/financial advisor will do is sit down with the client and spend time conducting an in depth financial fact find with them. This will give the advisor the required information to then advise the client based on what the clients need/wishes to do. If the advisor believes the client will be overstretched in doing what he wants to do (e.g buy a house) then he/she will let the client know. The recommendations made to the client will have to be recorded in a reasons why letter and the advisor will stand behind that.

In the virtual world a mortgage broker will answer the OP as accurately as possible based on the information to hand (usually three lines). He will leave it to others to go through the pros and cons of a poster's intentions.

[broken link removed]
 
ok.thanks for the feedback,but is it only me who thinks its stupid to be paying rent when it could be going off a mortgage? i will take the advice about stopping the saving and putting it off the credit card. i am going to have to live in dublin for the next 5 years at least because of my job so would it not make sense for us to buy rather than rent? yes the mortgage would have to be over 35 years to make it affordable for us but we would hope to decrease that term once my loans are paid off. and i am not struggling, i didnt say that i said things are tight as in im dont have extra money to be going on holidays or buying a new car type of thing. i am managing fine with my day to day living. is this not a good time to buy with the low interest, cheaper houses etc? we are both prepared to suffer it out for a couple of years leaving out the more lavish thing in life to buy our own home.
 
Norbank it is well known that brokers went through hoops to get clients through all the right boxes for banks to get loans that people were unable to repay long term. I personally know of several people who were able to get money via a broker when they never should have. Not all brokers are as honest and competant as you've come across on AAM.
 
norfbank, i just checked out your link, my incriment coming in march is gaurenteed i have it in writing since monday.they do depend on your preformance in work so the rest of them are not gaurenteed but this next one is certainly coming to me. thankfully.
 

I know, to be fair though, it wasn't just brokers. In the "good old days" clients used several brokers and also went direct to banks. More times than not the bank lent more than was offered to the broker. Even on AAM now you regularly come across, my broker got me €x but going direct got me €x + 30k as if this is a good thing.

Thanks for the kind words though (now where has that thank you button gone )
 
why dont you two just sit down somewhere and work it out.
 
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