Hi all
My partner and I are looking to buy a house together in 18m time or so and I'm just wondering whether we are better using our savings to pay off our debts or to have a higher deposit so the LTV percentage is lower on a mortgage.
My partner has his own house so by next year we estimate he will have £30,000 equity in it. Between us we estimate our debts will be £12,000 and we are confident we can save £8,000 by then. For a decent house around here we're looking at houses around £195,000.
So... do we use the £30k equity + £8k savings as a deposit for a house (so roughly 20%) or do we pay off the debts, leaving £26k as a deposit (roughly 13%). Do mortgage lenders offset debts against income before they work out how much you can borrow?
Any advice would be appreciated as I don't want to start paying the money into credit cards (all at 0% until 2014/15) when we could put it into our ISA's to use for a deposit. Once it's been paid off the cards there's no getting it back!
Thanks in advance
Jo
My partner and I are looking to buy a house together in 18m time or so and I'm just wondering whether we are better using our savings to pay off our debts or to have a higher deposit so the LTV percentage is lower on a mortgage.
My partner has his own house so by next year we estimate he will have £30,000 equity in it. Between us we estimate our debts will be £12,000 and we are confident we can save £8,000 by then. For a decent house around here we're looking at houses around £195,000.
So... do we use the £30k equity + £8k savings as a deposit for a house (so roughly 20%) or do we pay off the debts, leaving £26k as a deposit (roughly 13%). Do mortgage lenders offset debts against income before they work out how much you can borrow?
Any advice would be appreciated as I don't want to start paying the money into credit cards (all at 0% until 2014/15) when we could put it into our ISA's to use for a deposit. Once it's been paid off the cards there's no getting it back!
Thanks in advance
Jo