First-time buyer mortgages

Does debt matter when you’re buying your first home?

September 23, 2021
Information published was correct at the time of writing


For most of us, debt is a fact of life.

Whether you’re still paying off your student loan or simply have one or more credit cards, having a reasonable amount of debt shouldn’t be a problem when you apply for your first mortgage.

However, it’s worth making sure there are no unpaid debts that could set alarm bells ringing to your prospective lender.

When a provider receives your mortgage application, they will take a deep dive into your finances. While getting a mortgage is usually straightforward, the mortgage provider will want reassurance that you will be able to pay the loan back.

Unpaid debts, even if they’re for small amounts on long-forgotten bills, will harm your credit rating and could give the lender a reason to reject your application. To improve your credit rating, there are other actions you might want to consider taking such as closing any bank accounts you no longer use.

Pay particular attention to joint accounts you may have had in the past with ex-partners: debts like unpaid overdrafts could trip you up. If you think this applies to you, write to credit agencies like Equifax, Experian and TransUnion, and ask to be ‘de-linked’ from these accounts.

You should also make sure that you’re not linked to any unpaid bills: you would be surprised how an outstanding telephone bill from years ago can trip you up. Also, you must keep up your payments on current utility bills and credit cards – it’s often a good idea to consider paying by direct debit as this reduces the chances of you missing a payment in error.

Your mortgage is probably the most significant financial commitment you will ever make. So, having a financial health check before you begin the application process will not only improve your chances of getting the mortgage but will also allow you to streamline your finances before you embark on the next stage of your life.

If you’re worried about how any debt you might have could impact your ability to take out a mortgage, then you should consider speaking to one of our experts here at Charles Cameron and Associates first. It’s never too early to seek our advice when you considering taking out a mortgage.

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