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  • FIRST POST
    • toffee_lover
    • By toffee_lover 10th Jan 18, 8:08 PM
    • 2Posts
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    toffee_lover
    Mortgage with 0% Balance Transfer Card
    • #1
    • 10th Jan 18, 8:08 PM
    Mortgage with 0% Balance Transfer Card 10th Jan 18 at 8:08 PM
    Hi All,

    We're in the process of saving up for a 5% mortgage - our credit scores are decent, and we've had some meetings with brokers and building soc, and none think we'll have any problems with getting a mortgage.

    Our original intention was to pay off my credit card of ~£4k before applying for a mortgage, however, we'd like to be in a position to buy in the quickest possible time period, we're in a bit of a rough area and have had some trouble, and we're also concerned about getting on the ladder as soon as possible.

    So with this in mind, if we skip paying off the credit card at the moment, and instead use the money that I've saved up to repay it instead towards the deposit, how would that affect our application? I've put the figures in to the Nationwide Affordability Calculator and it doesn't seem to make any changes to the amount of money we can borrow when I add the credit card balance to it. Obviously I'm aware we'll have to pay it off on top of a mortgage, but we've budgeted for this.

    Complicating this matter further is that the credit card is a 0% Balance Transfer card and the offer comes to an end on the 1st May. So I have two options which is to open a new credit card now (sooner is better I'd imagine to space out between CC and Mortgage applications), so that I won't be charged interest, or to put up and pay the interest for a few months from 1st May to whenever the Mortgage is approved - then I can open a new CC and do the transfer then.

    My partner has just changed bank account and CC (which she pays off every month) to nationwide as we were advised that because her old accounts were graduate linked they were hurting her credit score due to having low credit limits and also high fees. Just worried we've got a lot of account instability potentially 3-6 months before applying for mortgage!

    What do you think?
    Thanks
Page 1
    • kingstreet
    • By kingstreet 11th Jan 18, 9:31 AM
    • 32,600 Posts
    • 17,547 Thanks
    kingstreet
    • #2
    • 11th Jan 18, 9:31 AM
    • #2
    • 11th Jan 18, 9:31 AM
    You should not apply for any new credit between applying for a mortgage and completion of the purchase. Waiting for the mortgage offer is not long enough!

    You don't have to pay off the card debt immediately. You can agree to repaying it on or before completion, or at least confirming there will be a reduced balance of £x by then.

    If affordability is unaffected, I wouldn't worry about it TBH.
    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. Please do not send PMs asking for one-to-one-advice, or representation.
    • toffee_lover
    • By toffee_lover 11th Jan 18, 11:03 AM
    • 2 Posts
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    toffee_lover
    • #3
    • 11th Jan 18, 11:03 AM
    • #3
    • 11th Jan 18, 11:03 AM
    Thanks for the reply.

    Haven't applied for the mortgage yet, probably won't for 3 months.

    If I apply for a new CC and do a Balance Transfer before applying for a mortgage I should be fine I guess? It doesn't affect affordability, so if I do that it's not going to impact my application when I do apply?

    Thanks
    • kingstreet
    • By kingstreet 11th Jan 18, 12:17 PM
    • 32,600 Posts
    • 17,547 Thanks
    kingstreet
    • #4
    • 11th Jan 18, 12:17 PM
    • #4
    • 11th Jan 18, 12:17 PM
    A recent credit search can count against you but if the overall strength of your application is sufficient, you should be fine.
    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. Please do not send PMs asking for one-to-one-advice, or representation.
    • SuzieSue
    • By SuzieSue 11th Jan 18, 12:23 PM
    • 3,728 Posts
    • 3,999 Thanks
    SuzieSue
    • #5
    • 11th Jan 18, 12:23 PM
    • #5
    • 11th Jan 18, 12:23 PM
    I have quite a bit more than you on long 0% BT cards and it did affect the amount that HSBC would lend me even though I had more than enough in savings (after taking account of the deposit for the mortgage) to pay off the balance in full.

    It might just be HSBC being fussy, but I was surprised how they didn't care that I was actually making money by earning interest on the savings instead of paying off my credit cards.
    • shortcrust
    • By shortcrust 11th Jan 18, 12:30 PM
    • 1,506 Posts
    • 1,973 Thanks
    shortcrust
    • #6
    • 11th Jan 18, 12:30 PM
    • #6
    • 11th Jan 18, 12:30 PM
    If it could be avoided I wouldn't want a credit search and a new account on my file three months before applying for a mortgage. They might not be massive negative factors but you never know how finely balanced a lending decision might be.
    • Cakeguts
    • By Cakeguts 11th Jan 18, 12:45 PM
    • 3,523 Posts
    • 4,874 Thanks
    Cakeguts
    • #7
    • 11th Jan 18, 12:45 PM
    • #7
    • 11th Jan 18, 12:45 PM
    It is interesting how often people don't offset debts against savings. If you have £5 in debt and £10 in savings what you actually have is £5 in savings.

    The obvious thing to do if there is any chance of the debt making a difference is to pay it off.
    • hazyjo
    • By hazyjo 11th Jan 18, 3:15 PM
    • 9,952 Posts
    • 12,690 Thanks
    hazyjo
    • #8
    • 11th Jan 18, 3:15 PM
    • #8
    • 11th Jan 18, 3:15 PM
    It is interesting how often people don't offset debts against savings. If you have £5 in debt and £10 in savings what you actually have is £5 in savings.

    The obvious thing to do if there is any chance of the debt making a difference is to pay it off.
    Originally posted by Cakeguts
    Especially as most (not the OP) are paying interest on it - often high interest/fees at that!


    My ex and I applied for a mortgage and they knocked the £10k or so plus substantially more off what they would lend us, despite us selling his flat and my house and clearing the debt and ending up with loads of equity and large LTV when buying.
    2018 wins:
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