Remortgaging with credit card debt

shez1981

Could anybody please advise me on what effect £6-7,000 of credit card debt would have when we remortgage. We currently have £3000 on a 0% card for the next 12 months, but we are looking at buying a new car for £6000 spread over two cards. We would keep balance transferring and paying the minimum plus a little extra, over the next 4 years until our fixed term mortgage is up, so I expect to have about £6-7,000 on credit cards by then.

The question is would we be best clearing the cards at time of remortgaging (hence ending up with say a 10% mortage rather than 15%) or could we remortage with a higher deposit (so better interst rate on our £105,000 mortgage) by keeping the £6-7000 on the credit cards?

Hope that makes sense
Thanks

Thrugelmir

To be clear. You are expecting to remortgage to clear the credit card debt?

shez1981

thanks for your reply. the question is what would be the mortgage lenders response if i wanted to keep the credit card debt on 0% balance transfer credit cards rather than clear them with the remortgage. How would it affect by ability to borrow at the best rates/the amount I could borrow? Fixed term isnt due to end until 2014, but I want to know how I stand before I buy the new car.

GMS

The interest rate on the cards would be irrelevant. Lenders usually work on a percentage of the outstanding balance as a commitment. 3% of the balance as a monthly outgoing is about right.

Depending on your circumstances this may or may not affect your affordability.

Shimrod

Just be careful with you strategy - you are assuming that you can continue to get 0% balance transfers which may not be the case. Also, in four years time, you will still be owing a substantial amount of money from the car purchase around the same time you may also be wanting to buy another car. You will potentially still be paying for a car you no longer have!

Thrugelmir

shez1981 wrote: »

thanks for your reply. the question is what would be the mortgage lenders response if i wanted to keep the credit card debt on 0% balance transfer credit cards rather than clear them with the remortgage.

Big assumption that you'll get an offer to do so. Lenders are increasingly less likely to consolidate debt.

Why should they? They'll earn more profit out of you by lending at unsecured interest rates.

Also repaying a car loan over 20 years ( or whatever the remaining term of your mortgage is) means you'll need to borrow more money in the future.

dimbo61

This sounds like a disaster waiting to happen!
If you cant afford a new car buy a cheap second hand one and cut your spending at the same time clear the credit card balance and then overpay the mortgage!

xyellowx

dont buy the new car you wont have a problem with affordability regarding c/c debt