Do you have to pay off credit cards before appying for mortgage?

goldmask

mhurren wrote: »

OK, I just think that the OP needs a bit of credit here. I only take exception because the OP, no, people in general, have been labelled as not knowing what 'real debts' are, and a means of structuring your finances to bring in an extra couple of hundred quid a year (I've got about £10k on 0%, allowing me to save interest against my mortgage at 2.5% = £250/year saved for a bit of cash flow management) towards a deposit for a house (not much but it all adds up) is labelled as ridiculous.

The OP was asking a reasonable question, and obtained a reasonable answer. There's no need to be harsh on them for asking that question, I thought that was what this board was for...

I'm actually in a very similar position to the OP, and the advice to clear these debts is something I'd thought about, but didn't quite know the answer to in terms of the affordability equation - so I've learned something too from your responses GMS, and the other useful posts above.

mhurren, good luck with your stoozing. It's quite surprising that a mortgage adviser cannot understand the logic behind the strategy. But his advice is helpful anyway, and I am very grateful for all the suggestions from this thread.

GMS

goldmask wrote: »

mhurren, good luck with your stoozing. It's quite surprising that a mortgage adviser cannot understand the logic behind the strategy. But his advice is helpful anyway, and I am very grateful for all the suggestions from this thread.

The logic behind the strategy is very clear. Unfortunately not everybody sticks to it. Clearly you have done it the way it is intended but plenty dont. I hear all the time 'It's at 0% so it doesn't count as credit'

Credit is credit regardless of rate. Many applications fall foul of affordability calculations due to cards, and the 'It's only 4 x income and the debts are not debts' line does not wash with lenders.

Running a balance on a credit card could hinder credit scoring as there is no way for a computer to see you have the money in a savings account. A balance is a balance as far as scoring is concerned.

Being declined for the best rate mortgage for being (in the logic of a computer) over inbebted would possibly wipe out the interest gained in the bank when the rate for the mortgage is higher because of the balance.

BFM

i think you guys are agreeing violently.

stoozing is obviously a smart play if you can make it work, unless you are in the process of applying for a mortgage as being debt free obviously helps the affordability calcs and clearly can't hurt your credit score. once you have the mortgage money stooze away again.

i don't really see what is contentious about this