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

Mips

They take a percentage into account - not the whole 6k/7k.

So it will be maybe 3% of your balance they deduct each month, then x by 12.

shez1981

Thanks for your reply

Do you mean deduct from the level of deposit that they classify me as having, or from the amount I can borrow? I assume you mean deposit.

So based on £7000 on the cards, and if I needed £15000 for a 15% deposit then I would need to provide an extra £2520 to the mortgage lender on top of the 15k to be eligible for the rate of interest linked to a 15% deposit. Have I understood?

Mips

shez1981 wrote: »

Thanks for your reply

Do you mean deduct from the level of deposit that they classify me as having, or from the amount I can borrow? I assume you mean deposit.

So based on £7000 on the cards, and if I needed £15000 for a 15% deposit then I would need to provide an extra £2520 to the mortgage lender on top of the 15k to be eligible for the rate of interest linked to a 15% deposit. Have I understood?

Hi

When taking into account what they lend you (what you borrow) they look at your incomings and outgoings. They take into account all fixed items - a gym membership, isn't counted. Nor is SKY TV - but loans and credit cards are.

So they look at your debt, and reduce your income by your outgoings.

So if you owe 7k on the cards, they wont reduce what they lend you by 7k, they will reduce it by your monthly payment.

Does that make sense?


Your deposit is your depost. The loan is the rest that you need, and they reduce what they lend you by your montlhly outgoings.

Say you house you want to buy is £125k and you have a £25k deposit.. they will lend you £100k..

jjww_2

Having recently remortgaged with approx £10000 on credit card it did not prove to be a problem for me however the mortgage company will look carefully at your ingoings and outgoings to see if affordability is an issue, also remember any late or missed payments will have an adverse effect on your credit rating.

Not wanting to second guess anybodys financial situation but are you sure that buying a car using two credit cards is the most cost effective method of borrowing the cash needed (I have tried this before and it is costing me now), although you may have 0% deals available to you now these are never long term and applying for more cards to balance transfer to in the future may affect your credit rating when you do need to remortgage, if you do decide to go ahead and finance your car in this way just remember to follow martins advice on balance transferring and make sure you know the exact dates when your low interest offer ends so the card companies cannot sting you when the promotional rate ends.