- August 27, 2023
- Posted by: legaleseblogger
- Category: Related News
Am I in Trouble? Seeking Advice on Debt and Buying a House in the Future
TLDR; Currently in debt and hoping to purchase a house in 2025. Feeling overwhelmed and seeking guidance on the situation.
**ETA, TA: Explaining the Car Situation and Concerns**
My apologies, but I noticed that many people are fixating on the car and assuming that I’m broke and unable to afford it. However, my main concern isn’t the debt itself, as I have the means to repay it. Originally, I planned to pay it off gradually over five years, but now I’ve decided to clear it within 1.5 years. What I’m worried about is how this level of debt will appear to a mortgage company, especially considering the high credit card utilization within 18 months of applying for a mortgage. It’s important to note that my debt is not unbearable by any means, and I can extend my current job if I need more time. This change in plans is due to my laziness, and now I’m facing the consequences. Ultimately, my primary concern is how this financial situation will be perceived by a potential mortgage provider.
*ETA – To clarify, the debt is not crippling, and I have decided to pay it off in a fraction of the time originally planned. If I need more time, I can continue in my current job. My lack of proactive financial planning and change in plans have resulted in these consequences. However, my main worry is the impact on my mortgage application, specifically the high credit card utilization ratio due to laziness, and an aim to have no debt (except car loan) in the next 18 months.*
Providing Some Context
I am currently in my 30s and have spent most of my adult life in the military, earning a decent salary. On the other hand, my partner hasn’t been able to earn much due to health reasons and childcare responsibilities (please refrain from judging). My total debt amounts to about £7,000, excluding the car loan. If we include the car loan, the debt reaches around £19,000. The majority of the debt is spread across three credit cards, all with annual percentage rates (APRs) ranging between 25% and 29%. As things stand, I expect to clear the debts by 2025, although I don’t intend to continue paying at the same rate if I can avoid dipping back into them after making significant repayments. By the time I apply for a mortgage, the car loan should be paid off by August 2026, leaving me with only £7,000 in debt. Importantly, I have not missed any payments, and the only concern is the high credit card utilization ratio.
Our Current Household Income and Future Prospects
Due to my spouse obtaining a job, our household income now stands at approximately £50,000. With my anticipated salary increases, this figure could rise to £54,000. If my partner’s career progresses as planned, our combined income could potentially reach £65,000 to £70,000. It’s worth mentioning that my partner has a good credit history since they didn’t have much credit in the past but have recently taken on some bills.
Desired House and Deposit
We have our sights set on a £230,000 house, and we are aiming to save a deposit of around £17,000. However, there’s a possibility that our parents might gift us additional funds, although we are not banking on that assumption.
Seeking Mortgage Approval: Our Chances and Concerns
Now, let’s address the core issue. What are the likelihoods of us securing a mortgage assuming that I can clear all debts (excluding the car loan) by August 2024? This would give us six months of relatively healthy bank accounts and debt records. Personally, I fear that the mortgage provider will take one look at our financial situation and immediately reject our application. I genuinely desire to leave the military, but the housing situation is forcing me to stay, while my own irresponsible spending habits have played a significant role in bringing me to this point. Furthermore, once I transition out of the military, it’s highly likely that I’ll experience a pay cut. However, I assume that this shouldn’t affect the mortgage provider’s decision once we successfully obtain the mortgage, as long as we continue to meet our repayment obligations. Are they allowed to penalize us or withdraw the mortgage approval after the fact?
Honest and Non-Judgmental Advice Needed
I would greatly appreciate brutally honest (yet preferably non-judgmental) input and advice regarding our chances of securing a mortgage. Furthermore, any guidance on how to improve our financial situation would be highly welcomed.
Thank you in advance for your assistance and insights!
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AI Legalese Decoder: Revolutionizing Legal Document Analysis and Translation
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Understanding the Challenge:
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