For some, buying a home whilst having credit card debt can seem like an impossible task. However, if you speak to the right Mortgage Broker in Cardiff, it can possibly be achieved. Read this case study to see how…
Grant and Sarah really needed a bigger home in Cardiff due to their growing family but unfortunately had accumulated some unsecured debt over the years in the form of personal loans and credit cards.
Part of the reason for this is Grant was taken out a self employed mortgage in Cardiff and had experienced a bad payer which put him back a little and for a while they struggled to make ends meet because Sarah had taken a career break to raise their family.
They had got onto the Cardiff property ladder in their 20’s and to be fair, some of the debt they had built up was because they had invested in their home and built a sizeable extension to the side of their property.
This had added value and they were surprised when an Estate Agent in Cardiff advised them their house was worth £20,000 more than expected.
They felt nervous about putting their home on the market not knowing whether they would be able to borrow enough for the move up the ladder, so they connected with us early on.
Their credit scores were not perfect but whilst they had missed a few payments over the years they had no defaults or county court judgements and had kept up all payments in recent years.
I was able to advise them that many mortgage Lenders in Cardiff will ignore unsecured debt when calculating how much you can borrow for your next mortgage providing we can evidence that there are available funds to repay that debt prior to completion.
This worried Grant and Sarah because they did not have lots of cash in the bank, they would be repaying the credit cards from the proceeds of the house sale.
I advised them this would not be an issue. When their property was sold I told them their Estate Agent would send them a document called a “Memorandum of Sale” to confirm the agreed offer.
With this document we would be able to demonstrate that not only did Grant and Sarah have enough equity from their sale to put down a 15% deposit on their onward purchase, they would also have enough funds to pay all the fees associated with moving and pay off all their debt.
We got an Agreement in Principle early on in the process to give them the confidence that their application would be successful and a few months later they had sold and went on to buy a lovely new family home.
If you have credit card debt and are looking to obtain a mortgage either outright or by selling the one you own, please feel free to get in touch with a mortgage broker in Cardiff. We can also help obtain an Agreement in Principle, usually within 24 hours of the appointment.
Date Last Edited: December 6, 2023