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    • *Rainbow*Warrior*
    • By *Rainbow*Warrior* 15th Jun 17, 10:57 AM
    • 332Posts
    • 64Thanks
    *Rainbow*Warrior*
    credit cards and mortgage application
    • #1
    • 15th Jun 17, 10:57 AM
    credit cards and mortgage application 15th Jun 17 at 10:57 AM
    A work colleague is applying for a mortgage. Her bank has said when calculating how much they can lend, they will deduct 5% of her income for each credit card she owns (I think just for having the card, irrespective of whether or not there is debt on it - though I'm not 100% certain about this).

    So this person has 3 credit cards, so they are deducting 15% of her salary when doing the calculation.

    Is this normal nowadays? Or is it likely to be just the particular lender she has gone to?
Page 1
    • Lilla D
    • By Lilla D 15th Jun 17, 11:40 AM
    • 316 Posts
    • 160 Thanks
    Lilla D
    • #2
    • 15th Jun 17, 11:40 AM
    • #2
    • 15th Jun 17, 11:40 AM
    The information you have is not quite correct:
    - quite a few banks do deduct 3-5% of the credit card balance regardless of what she's actually paying on them (it catches people out especially if the cards are on 0% and they only make the minimum payment every month)
    - if she does repay the cards in full every month or she commits to repay them in full by the time the mortgage application completes, then a lot of lenders can ignore the current balance, but not everyone
    - the 3-5% applies to the card balances, NOT her income and NOT the card limit

    Hope the above helps
    I am a Mortgage Broker
    You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
    • *Rainbow*Warrior*
    • By *Rainbow*Warrior* 15th Jun 17, 11:55 AM
    • 332 Posts
    • 64 Thanks
    *Rainbow*Warrior*
    • #3
    • 15th Jun 17, 11:55 AM
    • #3
    • 15th Jun 17, 11:55 AM
    Thank you Lilla D... that's what I've found in the past when I've applied for a mortgage, but I'd never heard of this deduction just for having a credit card so I thought it might be something new.

    Sounds like I've misunderstood what she said (or she has misunderstood what her bank said). Thanks
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