Home Buying Advice

Mortgages for Those with Debts

There are many people who would like to own their own home but believe they have too many outstanding debts, such as student debts, to have a real chance of having a first mortgage approved.

It goes without saying that we are not encouraging over-borrowing, just offering some reassurances.

Contrary to popular belief, having outstanding student loans, credit card debts or debts from cars or holidays does not necessarily preclude you from being able to obtain a first mortgage. Mortgages wih debts are still possible - even student debt and mortgages are a possible combination. Sub-prime mortgages or credit impaired borrowers are a recognised sector of the market - not without risks or reward on both sides.

If you take on a mortgage when you already have debts, you would be called a sub-prime borrower or a credit-impaired borrower, thus you would be taking part in sub-prime lending or credit-impaired lending.

The lenders simply take into account your existing loans when they calculate how much money they might risk lending you. There may be a slight premium to pay if you are credit-impaired or you are being lent to on a sub-prime basis but lenders will not lend to you if they don't think you can repay the loan. Mortgage lending is highly regulated in the UK.

Rather than assume you can't obtain a mortgage, seek mortgage advice.

The UK mortgage lending market is closely governed by the Financial Services Act designed to prevent mortgages being offered to those who cannot afford it

A history of paying off previous debts will certainly stand you in good stead when applying for a mortgage.
 
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