Is a mortgage easier than a Credit card?

Empty_pockets

I have about £12K on a credit card at circa 20%

I've applied for several low rate cards over the past year but always been turned down.

The last card I applied for was the HSBC in January.

The mortgage advisor at the bank, HSBC, seems to think that although I was turned down for a card, my equity release loan/mortgage may be accepted.

It it worth applying or am I just going to further damage my credit history?

Saving is considerable, about 17%

Empty_pockets

Should add, after going through all three credit reports I don't believe there is anything detrimental now on them.....bar the several applications I had made and had refused prior to getting my reports updated/cleared.

Cannon_Fodder

Use the savings to clear the CCs - no point saving at 3% and paying 20% to the CC companies.

Especially as Lenders will see the debt when doing an affordability test for the mortgage, and adjust terms/decline accordingly.

Empty_pockets

Sorry, My post wasn't clear.

I have no savings.

The difference between the CC and the equity loan is about 17%.

My query is really the accuracy of the information I got in branch that it was possible for me to get a mortgage accepted from the same bank that refused me a credit card.

ninky_2

i'd be wary of taking out any debt secured against you home. if you can't repay unsecured debt (e.g. credit cards) then ivas or bankruptcy are an option. if you can't repay secured debt on a property then your home can be repossessed. quite a serious step to take.

can you not just get a personal loan rather than a credit card?

Empty_pockets

I can pay the CC quite easily, but of the £300 im paying off, im getting charged £160 or so interest every month.

I've quite a good job and am not really worried about losing it. If I could get £10000 at 3% I could prob pay it off within 2 years.

dimbo61

well 2 things to take into account !
1 how much equity do you have in your home ? and will your existing lender HSBC allow you to borrow an extra £12K to clear your CC debts and add it onto the mortgage. Now the more equity you have and the lower the LTV on the property with the extra debt then the more chance you have of getting the mortgage.
2 If you have a well paid job how come you have £12k in CC debts ( its a question the HSBC will want to know!)
Adding unsecured debt onto your mortgage is not a good idea.
Please have a look on the debt free board and GOOD LUCK

Empty_pockets

dimbo61 wrote: »

well 2 things to take into account !
Adding unsecured debt onto your mortgage is not a good idea.

Care to elaborate? Is this just down to the risk of loosing the house?

I'm quite sure I could make the repayments.

ninky_2

Empty_pockets wrote: »

Care to elaborate? Is this just down to the risk of loosing the house?

I'm quite sure I could make the repayments.

everyone thinks they can make the repayments when they take out additional secured lending. the point is that were your circumstances to change (ill health, loss of job etc etc) you run a much bigger risk with secured debt than with unsecured debt.

however, if you are aware of the risks it is your choice whether you take it or not.

also, if you do take out the additional mortgage be careful not to run up your unsecured debt again. it's a bit of a viscous cylce with some - remortgage to 'clear' debt and then just rack up the debt again.

if the 12k credit card debt has accrued simply because you are regularly living beyond your means you need to take a serious look at you spending habits.

Empty_pockets

Hi,

The debt has been carried for years from when I was a low earner.
I've always made the payments, usually minimum and was purchasing on it too.

So it's not increasing, but not really decreased either. Now I have a very good job and am able to start hammering the debts away, just looking at the most efficient way to do this.

Net income is £2700-3500pm
Outgoings £2200 inc £350 on CC payment.

dimbo61

Was looking for a charles dickens quote which went something like
earn £2 a week and spend £1.99 happyness
earn £2 a week and spend £2.01 misery
If you have lots of equity in your home then your lender MIGHT lend you another £12K and make lots of interest off you over the next 20/25 years.
But if you cant afford to clear the CC each month then you ned to stop spending more than you earn.