Can You Get a Mortgage If You Have Debt?

If you have debt of any kind and are looking to apply for a mortgage, you may be worried about how it can affect offers or whether you can qualify for one at all. Rest assured, even if you have unsecured debt, you can still be eligible for a mortgage.

No matter the type of mortgage you’re looking for, whether you’re a first-time buyer, looking to remortgage or even consolidate your debt into a new mortgage deal, having debt doesn’t automatically mean a certain no from lenders. However, mortgage lenders do consider your eligibility by exploring your finances and credit score.

This guide will detail what lenders look at, the questions they might ask you and tips for improving your approval chances of getting a mortgage even if you have debt.

How Lenders Really Look At Your Debt

Mortgage lenders will look closely at your entire financial history and current spending, not just the types of debt you currently have. Having debt isn’t uncommon, and common types include:

• Student loans
• Credit card debts
• Store cards
• Personal loans
• Overdrafts

These are generally considered low-risk debts, and don’t have assets linked to them. More high-risk debts include:

• Council tax arrears
• Rent or mortgage arrears
• Court fines and County Court Judgment (CCJ)

However, missing repayments on any of these debts can negatively affect your credit score, which in turn can set an unfavourable opinion from lenders, but doesn’t necessarily automatically mean a rejection.

Mortgage lenders will look at your existing debts and their type, how much you repay every month vs your income, in addition to your credit history and if you have missed any payments.

What Your Debt-to-Income Ratio Means for Your Mortgage

Lenders will work out something called your debt-to-income (DTI) ratio. This is calculated by dividing your total monthly debt payments by your total monthly income. Your debt-to-income ratio will be expressed as a percentage, and measures how much of your monthly income will be used to pay off your debts.

A low DTI ratio works in your favour, and shows lenders that you are responsible in repaying debts while still having enough excess income. A high DTI ratio will do the opposite and indicate to mortgage lenders that you have too much debt to pay off, with not enough excess income to keep up with mortgage payments.

Generally lenders consider certain DTI ratios manageable. Below 39% is typically considered a healthy and manageable debt level. 40%-49% may still be acceptable, but could limit your borrowing options. Anything above 50% is often seen as high risk, which may affect mortgage approval.

If you’re planning to remortgage your home, a practical solution for those with a high debt-to-income ratio is to consider a debt consolidation mortgage. This is where those remortgaging their property roll all debts into one new mortgage payment, often helping people save hundreds of pounds every month. However, it’s also important to understand both the pros and cons of debt consolidation mortgages before leaping to a decision. Use our debt consolidation calculator to instantly discover how much you can save.

Mistakes To Avoid Before Applying

Whether you’re an existing homeowner or looking to climb the property ladder for the first time, there are common mistakes many make that lenders catch onto, harming their options or eligibility for a mortgage.

One common mistake is maxing out credit cards or taking out new loans shortly before applying. New borrowing increases your debt-to-income ratio and can signal higher financial risk to lenders. Similarly, missed or late payments on credit cards, loans or bills can damage your credit profile and reduce lender confidence.

Other common issues are overlooking future monthly expenses, such as upcoming car finance, childcare costs or other long-term financial commitments. Lenders want to see that you can comfortably afford your mortgage alongside both current and expected financial obligations.

Fortunately, there are a few key tips to help strengthen your application. Take these proactive steps in advance to better your chances of a great mortgage deal:

• Pay off existing balances where possible to reduce overall debt
• Avoid applying for new credit for at least 3-6 months before applying for a mortgage
• Make all payments on time to maintain a strong credit history
• Keep financial documents organised, including payslips, bank statements and tax records, as lenders will typically request these during the process
• Check your credit report beforehand to ensure there are no errors or unexpected issues

Taking these steps can improve your financial profile and help demonstrate to mortgage lenders that you are a reliable borrower capable of managing monthly payments responsibly.

Questions Lenders Might Ask About Your Debt

Can you get a mortgage if you have debt? Yes, you can, but lenders will want to know several key things about your debt before agreeing to your deal. Some common questions mortgage lenders may consider include:

• How much debt do you currently have? – This includes credit cards, personal loans, car finance and other regular repayments.
• Can you comfortably meet your monthly obligations? – Lenders assess whether your income can cover your debts alongside a mortgage payment.
• What is your credit history like? – They will review your payment history, credit usage and any missed or late payments.
• Are you saving for a deposit? – Lenders want to see evidence of consistent savings and financial planning.

Being transparent and accurate with lenders is crucial. When discussing your finances, provide clear information to help lenders make a fair assessment and make the mortgage approval process more streamlined. Have documents like payslips, bank statements, loan and credit card details and evidence of your deposited savings prepared in advance.

Tips to Improve Your Chances

The mortgage application process can be stressful with or without existing debt. Before starting the application process, make proactive choices to better your chances of not just being approved, but receiving the best offer possible.

If you can, reduce your debt as much as possible before applying. Keep credit cards and loans in good standing. In fact, if you spend up to 20% of your total borrowing limit each month and always pay it off in full on time, it can improve your credit score and earn favour with lenders.

If your monthly debt payments are considerably high and difficult to manage, consider debt consolidation. You should maintain regular documentation of your income, including payslips and bank statements. Even though almost everything is digital these days, it doesn’t hurt to print off physical copies of your financial documents, and many lenders still require physical evidence rather than digital. Always avoid major financial commitments before applying, and don’t be tempted by taking out loans or new credit cards 3–6 months before applying.

Lastly, you can always speak to a mortgage advisor, who can offer you their expertise and guide you to the right route to take when organising your debts before applying for a mortgage. For expert, supportive advice, the team at Proper Advice is more than happy to help with a free consultation. Contact us here or speak to us today by calling 01244 955399.

Think carefully before securing other debts against your home. The overall cost of repayment of other debts might be more when added to your mortgage. Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage.