Mortgage / Credit Cards

Touchdown49

Hi

I was hoping for a bit of advice from experts.

I have had three credit cards for a few years now and all are up to the limit, overall about £23k. During a recent re-location with work, I have now sold the house and am looking for a new one, but have money in the bank for a deposit. The problem is, with this level of credit card balance I will struggle to get a mortgage, but to pay off all 3 credit cards I will have less than 10% deposit. Is it feesable to phone up the credit cards and get the balances reduced if I say I will pay them off in full or is this a non-starter ? I am also considering the companies who say that your credit card debt could be paid off if taken out before April 2007. Even if I get one paid off, my 10% deposit should be fine. HELP !

aligerdie

I would avoid any company that says they can wipe your credit card debt off, they charge silly fees, and your credit rating will be shot to pieces so you won't get a mortgage.

Have you thought about renting for a while? It may be an idea to pay off your cards with your money, and then save like mad to build your deposit up again.

Whilst you may want to get a house asap, I personally would pay your cards off first otherwise you may find it harder to get your credit report back on track.

Degenerate

Touchdown49 wrote: »

Is it feesable to phone up the credit cards and get the balances reduced if I say I will pay them off in full or is this a non-starter ? I am also considering the companies who say that your credit card debt could be paid off if taken out before April 2007.

Forget it, either route will make it impossible to get a mortgage. Your best chance is to pay as much as you can off the cards (highest rates first), whilst still holding on to enough cash for a 10% deposit. That way you'll reduce your ratio of used to available credit, and appear credit-worthy.

Peeky

Why 2 threads?

Touchdown49

I posted on the credit card forum and the mortgage forum to get two different points of view. Somebody must have moved the one from the mortgages to this one, thus repetition.

Typhoon2000

I wouldn't have thought that having credit cards close to their limits will make much odd to the mortgage decision. If it bothers you, you could 'temporaily' pay off your credit cards before you make an mortgage application and and if you have the appropiate CC, BT it back your bank account. I am assuming you have enough to service both your mortgage and your credit card repayments

enjoyshoes

Typhoon2000 wrote: »

I wouldn't have thought that having credit cards close to their limits will make much odd to the mortgage decision. If it bothers you, you could 'temporaily' pay off your credit cards before you make an mortgage application and and if you have the appropiate CC, BT it back your bank account. I am assuming you have enough to service both your mortgage and your credit card repayments

agree with it

CannyJock

Typhoon2000 wrote: »

I wouldn't have thought that having credit cards close to their limits will make much odd to the mortgage decision. If it bothers you, you could 'temporaily' pay off your credit cards before you make an mortgage application and and if you have the appropiate CC, BT it back your bank account. I am assuming you have enough to service both your mortgage and your credit card repayments

Recent quote I heard was that used credit on a credit card is multiplied by 3 and deducted straight from your income in determining if you can afford a credit card.

£ 23k of debt will definitely affect a mortgage application. It's been discussed on the stoozing forum in quite a bit of detail before because we invariably have large amount of "used credit".

YorkshireBoy

CannyJock wrote: »

£ 23k of debt will definitely affect a mortgage application.

YBS would take 36% of this (12 months of 3% minimum payments) off your stated salary, before applying their income multiples...so knock £8,280 off your salary (and well over £30K off your borrowing capacity at 4x income multiple).

Touchdown49

I have just spoke to Experian and Equifax. While a lender may put a marker onto your file saying there is a dispute, if you are upto date with your payments there definately will not be an impact on your credit score. And this is the main factor in determining whether you get an acceptance for a mortgage.

Any thoughts ?

Katgrit

Looking at this in a very simple way - yes what Experian and Equifax said was correct. As long as you're up to date with payments then yes you'll probably still get ACCEPTED for a mortgage. However the amount they agree to lend you will be considerably less because of what you owe on your cards. Getting accepted for a mortgage and getting a suitable offer to actually buy a house are two very different things!