15% with debt / 10% without

andyuk01

Ive been saving up for a deposit with a view to purchasing sometime next year

Looking at properties around £200k and aiming for 15-20% deposit

I currently earn £42k a year and save £500 towards the deposit and pay £500 towards my £6k credit card debt (nearly all on 0% for another 9 months)

Ive got just over £20k saved already and have spotted a property in the right area for £170k which is structurally sound but needs quite a lot of cosmetic work doing

Im tempted to put an offer in for this but im not sure which approach is best

Paying off all my debt and go for a 90% mortgage
Leaving the debt and go for an 85% mortgage

No adverse credit history (late payments, ccjs) but i have moved house recently

Long post but any advice greatly appreciated

hcb42

I struggled to understand that, as I was thinking reverse way around, if you pay off the debt you would have less deposit - surely.

But i see what you mean - you want to refinance the debt. This is generally not the best idea, and especially not if you can clear it at 0%.

I would leave the debt, max the deposit, declare the payments, which will reduce affordability, but as you are on a reasonable salary, you would probably be ok. Plus in the time it takes to complete, you will have reduced the CC balance by another £1-2K

Giddytimes

You'll likely be given a slightly better rate with an 85% mortgage so I would go with that.

I shouldn't think the mortgage company would be overly concerned with your 6k debt as you have no missed payments etc, you could always ensure you tell them that the reason it isn't paid yet is because it's 0% so paying it early isn't to your advantage.

Are you certain you can manage the credit card payments and still pay it off before the 0% ends as well as paying your mortgage?

andyuk01

Giddytimes

My current rent is about £60 less than the mortgage payments would be so it shouldn't be too much of a push to pay everything off as i can put the money i was saving towards the deposit towards the credit cards as well

Ive plugged the numbers into a few affordability calculators and the best bet seems to be leaving the cc debt alone - put down a 15% deposit then focus on paying the debt off after securing the mortgage

Thanks