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Bigger deposit vs pay off credit cards?

smartstart2
smartstart2 Posts: 1 Newbie
edited 24 August 2009 at 4:09PM in Mortgages & endowments
Hi,

I'm saving for a mortgage deposit with my partner. Our combined income is about £40K a year.

I have approx £7K of credit card debt all on fixed low interest rates for the life of balance. My credit report from equifax comes out as Good.

We currently have about £13K saved for a mortgage deposit.

Do you think we would be better off using all that money for a deposit or would it be better to pay off some of the credit card debt?

I'm wondering if a mortgage lender would prefer less debt or a bigger deposit?

Comments

  • MMG
    MMG Posts: 97 Forumite
    It will probably work out the same - more debt = less they will lend you.

    Less deposit - less they will lend you.

    I'd just get the debts paid off and then focus on building your deposit.
  • poppy10_2
    poppy10_2 Posts: 6,583 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    Much better to pay off the credit card debts, even if they are low rate at the moment.
    poppy10
  • SelbyJay_2
    SelbyJay_2 Posts: 113 Forumite
    I'm in very much the same position, except i owe about £3k on low interest cards. I'm paying them off at £300 a month or thereabouts, but i constantly feel that i could be using the money to bulk up a deposit for a new house.

    Thing is, credit cards are evil, and i dont really want to take debts with me to a new house. New house, clean slate, that's how i'm trying to think.
    Mortgage - £37k
    Credit Card (A&L) -[STRIKE] £2300 -[/STRIKE] £1200
    Santander Credit Card - [STRIKE]£1400[/STRIKE] £1100
    [STRIKE]OD - A&L - £1300[/STRIKE] GONE!!!

    "I will be debt free, I will be debt free!"
  • dimbo61
    dimbo61 Posts: 13,727 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    What is fixed low interest rate ? 6.5% ???
    What are you earning on your savings 2/3/4% if you are lucky after TAX
    Pay off the cards and then save save and save
    Dont use the credit cards if you cant pay them off in full at end of month.
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