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Loan vs Credit Card when applying for a mortgage
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britishboysrbest
Posts: 2 Newbie
in Loans
Hi all,
Firstly apologies if there's a thread or response to the below already posted, this is the first post I've made.
A friend has advised me that if I was in a position to apply for a mortgage in the next 2/3 years a mortgage company would not include or class a credit card as a debt, whereas if I took out a loan to pay off my credit card, this would be and could/would work against me.
Basically I owe £8500 on a Abbey credit card that was 0% for 15 months as a balance transfer and I have made the cardinal sin of spending on it (yes I know!!) and realistically with my monthly outgoings I’m only making minimum payments which are currently about £190 per month. Having used Martin’s calculator if I continue to do this I would be paying this back for a colossal 60 years!!
In January I have a loan ending which will free up £158 per month so I had considered getting a loan over 2 or 3 years to just get shot of it, knowing that I could afford to pay £350 max as I currently am and basing the loan on between 8.4%-8.9% APR which seems fairly realistic.
However, if taking out a loan will affect a mortgage application I’d prefer to be a credit card tart (love that term!!) and apply for another 0% BUT NOT SPEND ON IT .... and buck my idea’s up by making more than the minimum payments after January.
Anyone know if the above is true?
Thanks
Firstly apologies if there's a thread or response to the below already posted, this is the first post I've made.
A friend has advised me that if I was in a position to apply for a mortgage in the next 2/3 years a mortgage company would not include or class a credit card as a debt, whereas if I took out a loan to pay off my credit card, this would be and could/would work against me.
Basically I owe £8500 on a Abbey credit card that was 0% for 15 months as a balance transfer and I have made the cardinal sin of spending on it (yes I know!!) and realistically with my monthly outgoings I’m only making minimum payments which are currently about £190 per month. Having used Martin’s calculator if I continue to do this I would be paying this back for a colossal 60 years!!
In January I have a loan ending which will free up £158 per month so I had considered getting a loan over 2 or 3 years to just get shot of it, knowing that I could afford to pay £350 max as I currently am and basing the loan on between 8.4%-8.9% APR which seems fairly realistic.
However, if taking out a loan will affect a mortgage application I’d prefer to be a credit card tart (love that term!!) and apply for another 0% BUT NOT SPEND ON IT .... and buck my idea’s up by making more than the minimum payments after January.
Anyone know if the above is true?

Thanks
0
Comments
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Mortgage companies do class credit card debt as debt, or at least all the ones we spoke to when we arrange our mortgage did!
When we were applying, they reduced our income by 3% of our credit card debt per month, so say we had income of £50k and debt of £3k, our income for multiplier purposes come out at £49k. 3% was generous as well, some lenders were going on 5% of the balance.0 -
Thanks for the advice I'll look at the loan option if that's the case, I just want shot of the debt.
Cheers0
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