will credit card effect mortgage?

jacks_mummy

Hi there,

We are all set to get some mortgage advice/put house up for sale and I was wondering whether having a credit card with an outstanding balance will effect us getting a mortgage?
We have around £70,000 deposit on our next home and have enough coming in to cover mortgage for a slightly bigger house (did the budget brain from this site!)

Thanks in advance for replies

liubeliu

My current lender when I applied deducted the outstanding credit card balance from the amount that they are willing to lend.

i.e. £40,000 salary and £5,000 credit card balance

On a multiple of x4 the lender would be prepared to lend £160,000. After taking into account your credit card balance they will loan maximum of £155,000 assuming LTV and credit searches come back ok

lewisa

Hi

I was told I had to clear a CC balence before HSBC would agree to my mortgage.

I pay my CC bill off in full each month, but on the day my mortgage application was processed I had a balence of about £5K because of just buying a car on it.

Even though HSBC could see I had enough in my current account to cover paying off the full CC balence on the next due date, and that my CC was still setup to clear in full each month, they insisted on the balence being paid before they said 'yes' to the mortgage.

The mortgage was for £108K with a 25% deposit, 1st time buyer.

herbiesjp

jacks_mummy wrote: »

Hi there,

We are all set to get some mortgage advice/put house up for sale and I was wondering whether having a credit card with an outstanding balance will effect us getting a mortgage?
We have around £70,000 deposit on our next home and have enough coming in to cover mortgage for a slightly bigger house (did the budget brain from this site!)

Thanks in advance for replies

Depending on the lender, they will either take a 3% or a 5% minimum payment of the balance on the card, and include it in their affordability calculators.

So the answer it yes it will affect the maximum mortgage you can get - by how much, will depend on the outstanding amount on the card and the lender chosen.