Deposit and Credit Card Stoozing!

formulaonefan

hello,

I have saved up 25% deposit for house purchase but 8.5% of that is from credit card stoozing (0% deals until mid 2009).

Am I better off paying the credit card debt and use 16.5% as house deposit or keep that credit card balance and pay 25% deposit towards a house?

Which one is better? Does having a balance on credit card affect how much you can borrow? If it is yes, then how much?

minimike2

If you are using money from a credit card to pay a deposit, then that is not stoozing is it.

You do not mention amounts, only %'s so it is impossible to say without further details.

Regardless of the above, lenders will not be happy with money coming from borrowed sources for a deposit, and will not like large credit card balances as it will impair your affordability.

Get in the real world and save a PROPER deposit instead of trying to be clever...it will only see you in difficulties later down the line if you have large credit card balances and a mortgage to pay.

boggie40

stash your credit cards somewhere where you cannot get to them, pay them off then save a tidy sum as a deposit for your new pad.

formulaonefan

minimike2 wrote: »

If you are using money from a credit card to pay a deposit, then that is not stoozing is it.

You do not mention amounts, only %'s so it is impossible to say without further details.

Regardless of the above, lenders will not be happy with money coming from borrowed sources for a deposit, and will not like large credit card balances as it will impair your affordability.

I think you misunderstood it. Before I started saving for house deposit, I had debt in form of loans, credit cards etc. I consolidated all of them by moving them to 0% Credit cards. Then I started saving for house deposit and have been building up my savings. Then I took some more 0% credit cards and moved cash from 0% credit cards to savings account (stoozing) and continued to save. Whenever my credit cards 0% comes to an end I moved them to another 0% credit card. Now all of my balances are on 0% credit cards until Mid 2009. But at the same time, my savings also reached 25% of the target deposit. All these happened over the last year or two. The plan is to pay of the credit cards with extra payments monthly rather then minimum payments month by month before the 0% deals comes to an end. When 0% deals comes to an end, we will move to cut-down balance to another 0% or re-allocated some of the funds in other investments to pay off the balance. Also the mortgage repayment (interest + capital) comes to 24% out of our monthly salary.

Get in the real world and save a PROPER deposit instead of trying to be clever...it will only see you in difficulties later down the line if you have large credit card balances and a mortgage to pay.

I know I'm in real world and I'm not trying to be clever! I didn't post this topic to be insulted. Get the real facts first before trying to accuse someone of trying to be clever or get real please!

spurs_nut

formulaonefan wrote: »

I think you misunderstood it. Before I started saving for house deposit, I had debt in form of loans, credit cards etc. I consolidated all of them by moving them to 0% Credit cards. Then I started saving for house deposit and have been building up my savings. Then I took some more 0% credit cards and moved cash from 0% credit cards to savings account (stoozing) and continued to save. Whenever my credit cards 0% comes to an end I moved them to another 0% credit card. Now all of my balances are on 0% credit cards until Mid 2009. But at the same time, my savings also reached 25% of the target deposit. All these happened over the last year or two. The plan is to pay of the credit cards with extra payments monthly rather then minimum payments month by month before the 0% deals comes to an end. When 0% deals comes to an end, we will move to cut-down balance to another 0% or re-allocated some of the funds in other investments to pay off the balance. Also the mortgage repayment (interest + capital) comes to 24% out of our monthly salary.



I know I'm in real world and I'm not trying to be clever! I didn't post this topic to be insulted. Get the real facts first before trying to accuse someone of trying to be clever or get real please!

I say use all your available credit for a deposit. Then you will really experience what the real world is like.

formulaonefan

spurs_nut wrote: »

I say use all your available credit for a deposit. Then you will really experience what the real world is like.

Who is talking about using all the credit as deposit??? The question was simple:

A. Pay off the credit card and use 16.5% deposit towards house? (or)
B. Use 25% deposit and pay off 0% credit card when 0% expires mid 09.

I was looking for something like: go with A or B or something like pay off credit card, save more and they buy or do what really works for you etc. But instead I'm getting all kinds of rude or insulting response. Very annoying to be honest!

domestic_goddess

Hi

I bet you wish you never bothered posting after the responses you have got on here

I am not sure if this will help you but me and OH have combined income of 36,000 and had credit card debts of around 9,000.

Halifax offered us a mortgage of 90,000 but said that if we paid all our debts they would offer us up to 145,000.

we ended up paying off the debts from the equity in our house.

anyway i hope that helps with how the debts affect how much you will be loaned.

:beer:

minimike2

I have got the facts. What you are asking is effectively should you use your credit cards for a deposit. You said so yourself in your first post. I am trying to help you by stopping you make a terrible mistake. Dont try and re-word it to make it sound like something else becuase you dont like what I have to say. At the end of the day, if you have that much on credit cards, unless you have a combined annual income in excess of six figures, with a mortgage to pay, you will not pay off the balances of the cards in 9 months. If you can afford to do that, then there is no reason why you should need to put credit card borrowings towards a deposit. However if that were the case, I doubt you would have needed to ask the question.

Just to add

"Who is talking about using all the credit as deposit???"

Well actually, you did.

"Am I better off paying the credit card debt and use 16.5% as house deposit or keep that credit card balance and pay 25% deposit towards a house"

Look, just be sensible. Dont go buying a house with huge credit card debts. 0% or not, its just not a good idea.

formulaonefan

sickofhavingnomoney wrote: »

Hi

I bet you wish you never bothered posting after the responses you have got on here

Yes, that's exactly what I thought. I was surprised to get such a rude response to be honest.

sickofhavingnomoney wrote: »

I am not sure if this will help you but me and OH have combined income of 36,000 and had credit card debts of around 9,000.

Halifax offered us a mortgage of 90,000 but said that if we paid all our debts they would offer us up to 145,000.

we ended up paying off the debts from the equity in our house.

anyway i hope that helps with how the debts affect how much you will be loaned.

:beer:

Yes, this is exactly the kind of information I'm looking for. How does it affect. So it looks like they cut nearly 1/3rd of mortgage amount if you have debt.

My understanding is, they will calculate my affordability and offer me mortgage based on that even though I have credit card.
Say for example:
10% of my monthly salary goes to credit card debt repayment.
25% of my monthly salary goes to mortgage repayments
30% of my monthly salary is food and other expenses
10% of my monthly salary is general expenses

leaving me with 25% of monthly salary as savings. Its how much percentage is mortgage repayment and will I have enough money to repay my debt and mortgage.

That's the kind of information I'm trying to find out.

minimike2

Blunt and to the point I may have been. Rude - not my intention. But hopefully I have made a point and you will listen to my advice. Of course that is your choice. Good luck with your house purchase.

formulaonefan

minimike2 wrote: »

Blunt and to the point I may have been. Rude - not my intention. But hopefully I have made a point and you will listen to my advice. Of course that is your choice. Good luck with your house purchase.

I won't be using all of my credit towards deposit. I have used 50% of my available credit on 0% and I have another 50% available credit. I don't have any intensions of using it and I'm thinking of cancelling those credit cards to improve my credit rating.

Thanks and I really appreciate your advice. The reason I have posted my intention is to get other's point of view and advice. I'm not going to make financial decision of my lifetime that easily without deeply thinking about things.

My thinking is simple and here they are:

1. 16.5% deposit, No debt = High Mortgage Interest

2. 25% deposit, 13.5% out of 25% deposit is on credit cards = Low Mortgage Interest but low mortgage loan as well BUT based on combined salary the mortgage loan we will get may still be enough for the house we want to buy.

3. Scale down the house we want to purchase so we have 25% deposit and money put aside for credit card payment when 0% runs out = Smaller property but unhappy wife!

4. Save for another 6-8 months so we reach 25% target deposit and debt free = What happens to property market? Will sellers still accept checky and low offer they do now in 6-8 months time? or property market goes all haywire or property market goes down even further? Lots of uncertainity there. Will we miss the golden oppurtunity we have now in 6-8 months time?

5. Pay off debt and get a mortgage at 16.5% deposit = paying too much on mortgage interest when we could have paid low interest on huge mortgage and have credit card balances on 0% savings us money in terms of interest.

So these are some of things that is going through my mind. Hope this makes things clearer.