The first step on this journey is to consolidate your credit card debts if you have multiple cards. This will not only reduce the interest payments you pay each month, it will also allow you to pay off the credit card amount faster. Reducing your outgoings and ensuring that you can save more effectively and as far as the lender is concerned you are more likely to be able to afford your mortgage payments in the future. This is the primary concern of any lender. If you can focus on getting your finances to a position where you are attractive to them then you will be able to move ahead with the purchase of your home.
It is possible to buy a house while you still have credit card debt. It is all a matter of your mortgage provider ensuring that your incoming and outgoing payments are at an acceptable ratio. The majority of lenders will not approve a mortgage if the debt to income ratio is higher that around 43%. If this is not the case you will need to find a way to curb your outgoing debt payments or begin to make more money. This can be done in a number of ways, but the most important thing is that you stick with it and focus on the goal of home ownership. This can be great motivation if you keep reminding yourself of why you are making the lifestyle change.
Making more money might seem impossible, however, the desire to buy a home could provide you with the motivation you need in order to get that promotion or apply for more opportunity. Either way, choosing this mentality will only be a good thing for you in the long run. One thing to bear in mind is that it is important to ensure that you have passed your probation period in a new role, as many lenders will not look favourably on the risk of you being unproven in a new role. This can be mitigated in a number of ways, you can make a note of how long your probation period is and when you expect to pass into being a permanent employee. Using this date you can then plan to have the remainder of your finances in check.
Once you have your credit in order, then you could to your parents for help if you are struggling with the down payment. Lenders will often refer to this as a “gift” and not a loan. This is an important distinction, as if you are expected to pay back the money, it effectively is another debt that needs to be factored into your debt to income ratio. This gift from your parents can be placed directly into escrow, or if you are receiving the money yourself, then there must be paperwork from your parents acknowledging that the money is in fact a gift. It is important to have this paperwork in order and reviewed by your lender to ensure that the application goes smoothly and the additional layer of complication does not reflect negatively on you.
Buying a house while you still have credit card debt is possible, as long as you are careful and can comfortably pay the mortgage on top of all of your other commitments. You should be able to have a buffer each month to ensure that any unexpected expenses do not cause problems for you. Owning a home can be expensive, hydro bills and the potential need to replace appliances can cause problems for the unprepared.