Credit Cards And Mortgages: A Toxic Mix?

If you find yourself struggling to manage your credit card debts but still hanker for your first home, you may find yourself in a catch 22 situation. Being a seasoned renter isn’t what you had in mind as you flew the nest and ventured out into the big wide world. You had a dream of purchasing your first house, getting a foothold on the property ladder and becoming financially wise and comfortable. Somehow life has gotten in the way, and things haven’t quite gone to plan.
Credit Cards
If you find yourself swimming in debt and struggling to come up for air, all is not lost. You may be tempted to forget all about your dream of home ownership. Don’t. Having a goal that you are desperate to achieve can be the one motivation that will see you get yourself out of debt. While reaching for the first rung of the housing ladder may need to be put on hold for a little while, you don’t have to be completely debt free before applying for a home loan. In fact, most people who take out mortgages are in some form of debt, they can just manage it a little easier.
First of all, make a list of all of your outgoings including your debt repayments using one of the budget templates found at Don’t be embarrassed and list everything including your car finance, credit card repayments and personal loan debt. Tot all of this up so you have a monthly debt repayment figure. It may be wise to venture onto a site like and see if any of the specialist companies reviewed on there can merge all of your chunks of debt into one manageable monthly repayment. This way you are not forever scanning your bank account to ensure you have enough to cover all the little debt repayments that come out on different days during a month.
As your debt level decreases and you begin to pay off the capital and not just the interest of your loans and credit cards, your credit score will inevitably improve. This signifies to home loan lenders that you are getting on top of your financial woes and transforming into a responsible borrower.
Mortgage Products
Home loan lenders will cover the cost of the majority of your house purchase with you putting up a deposit to show your commitment and ability to save. With a mountain of debt, it can seem like a constant struggle to put any money aside for a deposit. However, any spare cash that you have after your debt repayment can be squirreled away, and you’ll be surprised at how it begins to add up.
Remember, you don’t have to be debt free to apply for a home loan. Mortgage lenders actually like to see a little bit of debt in any potential borrower’s name as it shows an ability to manage money. Just ensure you haven’t been late or missed any payments.
Although it may take some time, your dream of homeownership is merely delayed, not quashed. Give yourself some breathing space, and soon you will have your debt at a manageable level, your deposit for a house sitting in the bank, a mortgage application approved and you’ll finally be hunting for your first home.

Denny Jones

Hi, I'm Denny Jones, a seasoned financial advisor and writer passionate about helping others conquer debt and achieve financial stability. With over a decade in the industry, I've guided countless individuals toward smarter financial decisions through practical advice and insightful writing. Join me as we navigate the path to financial freedom together.

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