Clear personal loan debt 'before seeking mortgage'
04 March 2010 16:31:01
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| Settling personal loans is prudent before making a mortgage application. |
Writing for the Guardian, financial expert Hilary Osborne conceded that Britons will continue to find it difficult to secure home purchase loans in the current economic climate.
However, she explained that consumers may see their applications treated more favourably by lenders if they can prove that they do not have other debts to settle.
"If you have kept up with loans but still have outstanding debts, see if you can clear them before you apply for a mortgage," she wrote.
"When assessing how much you can afford to borrow, lenders will take into account any regular monthly commitments and reduce the amount they are willing to lend accordingly."
Ms Osborne also warned individuals not to overpay each month if they cannot clear their personal loan debt, as their lower net disposable income will be noted by lenders.
Earlier this week, the Bank of England revealed that the total value of new personal loans and other advances increased by £300m in January.
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