A lot of people think they wouldn't be able to get a mortgage if they have debts, but this is not necessarily the case. Although it may be more difficult to secure a mortgage if you have racked up thousands in debt or have taken out loans from risky lenders like Payday loans companies, many people who have debts will have very little trouble securing a mortgage and buying a house. If you are someone who is planning to buy a house soon, and you are worried about the impact your existing debts will have on your ability to do so, here are some tips to help you increase your chances of success:
1. Make your payments on time
Having debts is not necessarily a problem, but missing payments against them is likely to be a black mark against you when it comes to buying a house, so be sure that you make, at least, the minimum payments on all of your debts (and any other bills for that matter) in the months ahead of applying for a mortgage.
2. Pay off as many debts as you can
Paying down your debts as much as you can, will always look better than having large debts when it comes to buying s house. Mortgage providers look at your whole financial situation before making a decision on whether to legend to you or not, so if you have a high debt level, you may not be able to access the best deals until you have paid down your debts. Paying more than the minimum, if possible, is a good way to do this.
3. Speak to a mortgage broker
If you do have high levels of debt, or if you have had issues with debt in the past, then it could be a good idea to speak to local mortgage brokers who specialise in helping people with more difficult circumstances to secure a mortgage. Often, mortgage brokers have access to specialist mortgage products designed for people who have had debt issues, which would not be available elsewhere, so it is worth, at the very least, having a conversation with a mortgage adviser to see if they will be able to help you.
4. Consider remortgaging
If you already own your own home, but you are looking to move at some point in the future, it may be worth looking at remortgaging, which will enable you to pay off some of your debts, and put you in a better position to move up the property ladder further down the line. Of course, this will depend on how much equity you have and how many debts you have in total, so be sure to talk to an expert before making the decision.
5. Avoid getting into more debt
Getting into even more debt when you already have debt liabilities, is a really bad idea if you are going to apply for a mortgage in the near future as it may look like you cannot manage your money effectively.
Debt does not have to be a barrier to home ownership, but you have to play it smart if you want to be successful. Good luck!
