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Getting a Mortgage When in Debt

Can I get a mortgage while in debt? Find out here.

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By Pete Mugleston  | Mortgage Advisor Pete has been a mortgage advisor for over 10 years, and is regularly cited in both trade and national press.

Updated: 5th July 2019* | Published: 4th July 2019

Can you get a mortgage if you’re in debt?

Looking to get a mortgage but worried about how being in debt could affect your chances? It’s true that with some lenders, debt can be an issue. However, this certainly isn’t the case for every lender on the market.

So, if you want to know how and where you can get a mortgage when in debt, then you’ve come to the right place.

In this short guide, we’ll be providing helpful tips and advice for everything you need to know about getting a mortgage when in debt.

If you would like to talk with an advisor about how to get a mortgage when in debt, call us on 0800 304 7880 or make an enquiry. We’ll put you in touch with an expert advisor who can help. 

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Can I get a mortgage if I’m in debt?

In short, yes. Your own personal and financial circumstances can have a huge impact on the likelihood of you getting a mortgage when in debt, so lenders will first need to see how much debt you are in and how you manage it.

Some lenders can have strict criteria that prevents them from lending to borrowers with a less than perfect credit report, as this can suggest a history of mismanaging finances.

Your ability to pay back your loans on time and in full is of high importance to lenders, so lending to someone who has previously had issues with repayment can be seen as a risk.

That being said, some specialist lenders can take other factors into consideration such as your debt to income ratio.

Speak to an advisor to find out more.

What is a debt to income ratio?

A debt to income ratio is essentially your monthly debt payments divided by your gross monthly income (this is your income before taxes or any other deductions are taken out).

Lenders use this simple calculation to determine whether you can comfortably afford your new mortgage along with your current other debts.

For example, if your total monthly debt came to £500 and your monthly income is £2,000, your debt-to-income ratio would be 25%, which is considered healthy.

Lenders express the debt to income as a percentage. To calculate the percentage, you need to divide your monthly debt by your monthly income and multiply this figure by 100.  

The rule of thumb is that the lower the percentage, the better the debt to income ratio. That being said, the debt to income ratio required to get an in debt mortgage can vary from one lender to the next.

Tips for calculating your debt to income ratio

Some lenders will also include the debt of your potential mortgage within the calculations when working out your debt to income ratio. 

Another point to make is that a lot of people can forget to include many of their ‘debts’ when calculating their debt to income ratio which can lead to confusion or miscalculations. 

Because of this, remember to include all debts such as:

If you’re struggling to calculate your income to debt ratio, make an enquiry today and we’ll put you in touch with one of the mortgage experts we work. The advice you receive is free and there will be no marks against your credit rating.

How do I get a mortgage when in debt?

As mentioned previously, getting a mortgage while in debt may be possible depending on your circumstances.

Every lender is different when it comes to what they will and won’t accept. For instance, most lenders don’t like to see new debt taken out in the months leading up to a mortgage application, though a minority might be more flexible in the right circumstances.

Any debt the borrower has at the point of application has to be factored in to affordability, and this will likely affect the amount you’re able to borrow.

One thing that is for certain is that getting a mortgage with debt can be a lot easier when you know which lenders are more likely to accept you. You can find these lenders with the help of a mortgage advisor.

How can a mortgage advisor help me get a mortgage when in debt?

Many of the advisors we work with have years of experience when it comes to helping people in debt find mortgages. 

Scouring the market for numerous lenders can be confusing, especially if you’ve never done it before and are unsure about what constitutes as a good mortgage rate. You want a fair and affordable deal, and working with a mortgage advisor can help to achieve that.

The mortgage experts we work with have whole-of-market access to many lenders right across the UK and can compare various deals on your behalf. Make an enquiry to get started.

Speak to an expert about getting a mortgage while in debt

Contact us today on 0800 304 7880 or make an enquiry here to learn more about how you could get a mortgage when in debt.

The advice you receive is always confidential and  we don’t charge a fee.

Updated: 5th July 2019
OnlineMortgageAdvisor 2019 ©

FCA disclaimer

*Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of the advisors we work with to confirm the most accurate up to date information. The info on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisors working with us are fully qualified to provide mortgage advice and work only for firms who are authorised and regulated by the Financial Conduct Authority. They will offer any advice specific to you and your needs. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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