Preparation for Mortgage Application - Should I use my Credit Cards?

Gopes

Dear All,
I am sure this will have been discussed on here previously, but I was unable to find anything relevant...

Clearly anyone applying for a mortgage should clear any outstanding debts, including Credit Card balances, and I have done this - clearing my old 'stoozing' balances, and am now 'debt-free'.

Historically, I have always used a credit card for 'day-to-day' purchases (groceries, etc.), clearing the balance in full every month. I have done this mainly out of habit, and also to show (on the credit reports) that I am credit-worthy, and have no failed/missed payments on record.

I have checked my Credit Reports (Experian and Equifax), and these are accurate and only show the current balance on my spending credit card. They also confirm that I have had no 'missed payments' on any debt in the last 6 years (period covered by reports).

Question 1: I currently have 3 credit cards (2 with zero balances, the other being the forementioned 'spending card). Should I cancel these cards, or is there any reason to keep these accounts open?

Question 2: Should I continue to use the 'spending card' - or would it be better to cease all use of Credit Cards, until such time as I have obtained a mortgage, and just use my debit card for spending?

Thanks for your views/input.
Gopes

Joe_Bloggs

I do not think you should worry given your position.
J_B.

Gopes

Joe_Bloggs wrote: »

I do not think you should worry given your position.
J_B.

Cheers,
I am hoping that this is the case. Being a FTB in London/South East, am looking at a fairly high income multiple (4-4.5x gross salary), and a high LTV (90%).

I am not looking to get in to a debate around affordability - I am comfortable that that the monthly payments would be affordable, with a reasonable buffer £500-£600 left over after normal expenditure, for emergency events / interest rate rises.

What I do want to do, is to put myself in the best possible situation, so as to maximise the array of products/rates available to me (given my comparatively stretched situation).

Thanks again.
Gopes

Wh05apk

Ensure you on the voters roll, I would continue to use credit cards, but ensure repaid in full every month, lenders like to see that you can control credit a credit card is the best way to proove/disproove this.

Apart from the above, there is not a lot else you can do, so just ensure everything repaid on time, and build your savings.

Thrugelmir

Gopes wrote: »

I am hoping that this is the case. Being a FTB in London/South East, am looking at a fairly high income multiple (4-4.5x gross salary), and a high LTV (90%).

I am not looking to get in to a debate around affordability -

Unfortunately your view of affordability, and a lenders view of risk may not realign.

No debate. Just fact.

Gopes

Thrugelmir wrote: »

Unfortunately your view of affordability, and a lenders view of risk may not realign.

No debate. Just fact.

Absolutely agree - all I am trying to do, is align myself as best as possible (within the constraints of income/price/LTV), to give myself as good a chance as possible.

Ultimately, if a lender is of the view that I represent an unacceptable risk, then they will not lend to me, and I will have to try elsewhere. But the point of this post, was to explore whether I would be better advised to cease all credit card usage, or to continue to use a credit card in a responsible manner.

The consensus seems to be that the latter is slightly better, as it continues to demonstrate that I am creditworthy, and manage my money in a suitably responsible manner.

Thank you all for your view.
Gopes

Thrugelmir

There's a lot to be said for saving with the institution you wish to borrow from. As regular saving builds a positive picture of your financial discipline. .

Wh05apk

Thrugelmir wrote: »

There's a lot to be said for saving with the institution you wish to borrow from. As regular saving builds a positive picture of your financial discipline. .

Makes no difference anymore saving with the lender, besides, how do you know who you will get the mortgage from when the time comes?

Thrugelmir

Wh05apk wrote: »

Makes no difference anymore saving with the lender, besides, how do you know who you will get the mortgage from when the time comes?

Times are changing I suspect. As increasingly mortgage lenders will become ever more reliant on retail deposits to fund mortgages.

callmechar

Your situation very similar to mine re how much money you want, 90% deposit etc....£500 left a month. I am not sure £500 is enough, the lovely people on here have helped me