Loan application before or after mortgage renewal?

benchyboo · 10 December 2012 at 1:22AM

Hi all,

Just after a bit of advice. We currently have credit card debts of about £5000, car loan at £1700 and would like to replace our kitchen and fascias/soffits etc we have worked out that borrowing £12000 would clear the existing debts and finance the home improvements. The repayments on the loan would be less than the current combined repayments on the credit cards and the car loan together (not by much but still less).

We are due to renew our mortgage deal in June 2013 (currently on a fixed rate of 5.9%) and wondered if it would look better to mortgage lenders if we waited until after the renewal to apply for the loan or if it we should go for it now? Affordability is not a problem as we comfortably afford the current repayments so we aren't looking to consolidate to reduce payments (this would be a bonus and would mean we can get the home improvements done quicker).

Thanks in advance for your replies.

kingstreet · 10 December 2012 at 9:19AM

If you are replacing short-term unsecured credit with other short-term unsecured credit, the impact should be neutral. You should close the accounts you've paid-off though.