Re-mortgage/credit check advice please

lottay

Hi, I am a new poster on this site, but have valued the information provided over the years and hope somebody will be able to advise on the following...

Outstanding mortgage £72000
House vale approx £200,000
Credit card debt £5200 on 3 cards with a total £21,000 limit
Overdraft £2,200 on a £3000 limit
Annual gross income £44,000

We are coming to the end of a 5yr fixed rate mortgage with Standard Life in January and I'm now looking round for a new deal. However, last month, I enquired about a personal loan at a representative rate of 6.7% from our current account provider (HSBC) for some home improvements and after an age of going through all our income/outgoings, the application was referred to someone else.

The next day, we were offered the loan at a rate of 15.9%, which I declined. They would not tell me why we did not qualify for the representative rate.

I checked our credit file with experian and we had a score of 999 and no adverse credit etc, but I am a bit worried that there is some underlying problem I'm not aware of and it will affect a mortgage application. Standard Life have offered to transfer us to a 3yr fix at 4.29%(the only product they have) but I think we would be better on a tracker (fee free if possible!)

So, what do you guys think...is it the credit card debt, overdraft or could our monthly outgoings be deemed 'too high', what do I do!! Any thoughts and advice would be greatly appreciated

Thanks:)

PS I am going out now for the next few hours, so not ignoring anyone!

Wh05apk

Your income seems ok, I suspect your current outgoings are what is causing the problem, why not consolidate the whole lot onto your new mortgage, which should be ~2.5-3% , work out what you can afford to pay back comfortably then reduce your term to match that figure?

liubeliu

Over £15K of unused Credit Card limit is considered a risk. You may not be using at the moment, but they will see that it could potentially be used therefore changing your risk profile.

lottay

Thanks very much for your replies Wh05apk and liubeliu...

Forgot to say, we are currently paying £597 a month on the mortgage and have 14 years left.

I would ideally like to bring the monthly payment down, but we can afford that amount so
I would consider consolidating the credit card debts as we would save £50 per month on each of them. Would a lender look favourably on doing this or would it be best to not mention what we want the extra for?

Also, with the high credit limit on the credit cards, can we ask the credit card companies to lower the limits before we make a mortgage application, will it make a difference?

Thanks

Wh05apk

Most lenders will allow debt consolidation, if you don't tell them you will use the money to repay the debts, they will take the repayments off as commitments reducing the amount they will lend.

Your credit card limits should pose no problem with a mortgage.

lottay

thanks Wh05apk, your advice has been really helpful, now to find a good deal!!