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    • J22ker
    • By J22ker 14th Mar 18, 8:26 PM
    • 1Posts
    • 0Thanks
    Mortgage - credit card debt or personal loan
    • #1
    • 14th Mar 18, 8:26 PM
    Mortgage - credit card debt or personal loan 14th Mar 18 at 8:26 PM
    Hi all

    Iím going to be applying for a mortgage soon.

    I have about £4000 of debt split over two credit cards.

    Would I be best to apply for a personal loan to pay off the credit cards or keep the cards and try to pay off as much as possible before applying?

    Also would £4k of debt have a negative effect on my chances of getting a mortgage?

Page 1
    • Slick88
    • By Slick88 14th Mar 18, 8:41 PM
    • 6 Posts
    • 2 Thanks
    • #2
    • 14th Mar 18, 8:41 PM
    • #2
    • 14th Mar 18, 8:41 PM
    I think it would depend on your affordability.

    I!!!8217;m currently in the mortgage process with around 18k on credit cards. Joint application with the OH. Never missed a payment. Our MA said it wouldn!!!8217;t be a problem as long as we past the affordability checks.

    We!!!8217;re about half way through our mortgage app and it hasn!!!8217;t been mentioned. But I had been completely honest about all debts and were they lay. I!!!8217;ve definately passed the hard credit search stage.

    The debt is around half my annual salary. The OH has non.
    • Richard_Pia
    • By Richard_Pia 14th Mar 18, 9:51 PM
    • 33 Posts
    • 18 Thanks
    • #3
    • 14th Mar 18, 9:51 PM
    • #3
    • 14th Mar 18, 9:51 PM
    £4000 credit card debt would certainly have an impact on the amount you could borrow. Lenders will typically take 3% of your credit card debt as a monthly commitment, so if consolidating the debt in a loan meant paying a lower amount each month then it could benefit you affordability wise.

    You would need to be wary of any new credit searches applying for a loan would involve, as a lender would have sight of these and so could impact your credit score when applying for the mortgage.

    Ultimately, it depends on affordability, as even with the credit card debt, if you have enough income you could still borrow the amount required.
    I am a Mortgage Adviser

    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.
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