Scenario A or B?

stuart2588

What would be the better scenario when applying for a first mortgage

Scenario A.... Having 3000 saving and 2000 credit card debt?

Scenario B .. Having no savings and no credit card debt?

Thanks

Stuart

andysdad_2

The two scenarios are not equal the obvious answer is (A) then use £2000 to pay off the credit card debt leaving you £1000 savings, which is better than (B). So I would offer Scenario C as £1000 saving and no debt as the better option.
Others with knowledge of the mortgage market will advise on the relative influence of credit card debt

_Andy_

stuart2588 wrote: »

What would be the better scenario when applying for a first mortgage

Scenario A.... Having 3000 saving and 2000 credit card debt?

Scenario B .. Having no savings and no credit card debt?

Thanks

Stuart

Neither - scenario A doesn't give you sufficient deposit, scenario B doesn't give you any deposit.

luckyfool

Having a history of spending on credit cards and making payments on time is good for your credit score. As long as affordability is not a big issue, and the credit card balances are kept under around 50% of the limits then keeping the balances should not negatively effect your score. Otherwise you are better clearing the cards and just paying off any spending on them in full on a monthly basis.

Most lenders are not going to take into account any savings you have in the background as part of their credit score. As Andy says though you will need access to 10% plus to get access to most mortgage deals, and 25% plus to access reasonable rates.