Leaving unpaid credit card debt for too long and it could ruin your chance of getting a mortgage in the future. Instead of mortgages being based on how much you earn it will be more based around how much you can afford after all your outgoings and debt re-payments.

Banks such as Alliance and Leicester, Halifax and HSBC are basing most of their mortgage offers on mathematical formulas which calculate applicants ability to pay. Until now most lenders based their offers on multiple of salary calculations.

This now means that people who do not carry a lot of debt will be offered larger mortgages than applicants who have personal loans, student loans and credit card debt. Mortgage lenders will now seriously consider all of these when running credit searches against applicants. Also if applicants provide false or incomplete information on application forms will result in refusals.

Other consequences of this new process will mean single parents will be offered lower mortgages than single people because dependants will have to be considered. Also joint mortgage applications could be affected if say one of the applicants has larger debts than the other.

So the best way forward is to clear as many debts as possible before applying for a mortgage and make sure that if you are applying with another party that they do the same.

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