Getting a mortgage

CreditCrunching

Hello,

I'd like to apply for a mortgage in the next 6 months to a year, and I'd like to know what I can do to maximise my chances of getting one. The deposit is sorted. I have a lot of available credit and recent applications (getting credit cards and current accounts for the various benefits they offer) and I am not sure how these factors will affect my application, or how best to rectify them before applying.

Please can you advise me based on the ballpark figures below.

Salary £35k

Overdraft limits
Current acct A = £1000 (acct opened approx 2003)
Current acct B = £1500 (interest free, acct opened 2008)
Current acct C = £1500 (acct opened 12 mths ago)
Current acct D = £500 (£250 interest free, acct opened 6 mths ago)
Current acct E = £2000 (interest free, acct opened 4 mths ago)

Credit card limits
Credit card A = £10000 (opened approx 2003, cashback)
Credit card B = £500 (opened 12 mths ago, 0% deal, balance £0)
Credit card C = £7000 (opened 12 mths ago, 0% BTs, balance £0)
Credit card D = £4000 (opened 12 mths ago, cashback)
Credit card E = £500 (opened 4 mths ago, cashback)

Total available credit = £28500

My actual use of the available credit is very low - one current account has a debit balance of £1200 (interest free) which will be paid back over the next 4 months. The cashback cards are paid off in full every month.

I have two (non-consecutive) missed payments on one credit card from 2009 - no other missed payments/defaults.

I was declined for one current account and one credit card approximately 9 months ago.

I'm planning to cancel the two 0% credit cards with £0 balance ASAP which would reduce my total available credit to £21500. Ideally I want to hang on to the other three credit cards for the cashback benefits.

Is there anything else I should do to improve my credit file? I've heard mixed things about the impact of reducing limits!

Thanks!

manzanilla

what are the benefits you are getting from all those current accounts? I would close 3 of them!

do you really need 3 cashback cards? On a salary of 35k with a mortgage, your discretioonary spending isn't going to be huge.

if you have the deposit saved up, then use some of it to clear the outstanding overdraft now. The amount you gain by letting go on for the next 4 month is less than £10, probably less than 5. Start simplifying your life!

YorkshireBoy

manzanilla wrote: »

what are the benefits you are getting from all those current accounts?

Well B, D, & E have interest free overdrafts.

And A should look good on credit scoring being as it's a 10 year old account.

And D looks like an FD account, so OP has probably got their regular saver running alongside?

And, purely a guess, C & E could be 3% paying BoS and/or LTSB Vantage?

do you really need 3 cashback cards? On a salary of 35k with a mortgage, your discretioonary spending isn't going to be huge.

Maybe not, but partner's salary could be huge! Also could be buying for family etc.

Start simplifying your life!

Trouble is, to try and protect from inflation one needs to get the best return on savings. These days that means using more current accounts than savings accounts!

OP,

In my experience mortgage lenders aren't really concerned with available credit, just 'debt', ie used credit. So clear any debt at least 2 months before making a mortgage application and you should be OK.

It's understandable why you'd be declined for a credit card (having 4 existing and quite high available credit at the time), but I would be a bit concerned by the current account decline (who was it, and why were you declined?). Personally I have 19 current accounts and have never been declined (other than when speculatively trying for a 5th Nationwide current account when the limit is 4).

CreditCrunching

manzanilla wrote: »

what are the benefits you are getting from all those current accounts? I would close 3 of them!

do you really need 3 cashback cards? On a salary of 35k with a mortgage, your discretioonary spending isn't going to be huge.

if you have the deposit saved up, then use some of it to clear the outstanding overdraft now. The amount you gain by letting go on for the next 4 month is less than £10, probably less than 5. Start simplifying your life!

Thanks for your comments. I appreciate that it does look unnecessarily complicated!

The benefits are 1) free travel insurance (and long banking history), 2) interest free overdraft (will close this once it's paid off in 4 months, deposit is currently inaccessibly invested), 3) cashback, 4) switcher bonus and good rates for linked savings accounts and 5) excellent in credit interest rate.

I want all of the three cash back cards because they all have their uses as cashback is earnt at different levels on different things with different limits on each one. They make me over £200 a year.

However, I would sacrifice some of the above if it would actually make any difference to the chances of success of my application!

CreditCrunching

YorkshireBoy wrote: »

OP,

In my experience mortgage lenders aren't really concerned with available credit, just 'debt', ie used credit. So clear any debt at least 2 months before making a mortgage application and you should be OK.

It's understandable why you'd be declined for a credit card (having 4 existing and quite high available credit at the time), but I would be a bit concerned by the current account decline (who was it, and why were you declined?). Personally I have 19 current accounts and have never been declined (other than when speculatively trying for a 5th Nationwide current account when the limit is 4).

Thank you for your advice. There are a few more current accounts I want to collect for their beenfits as well, but I'm happy to leave those for the time being!

The current account I was declined for was an RBS graduate account and I asked for a £3000 overdraft (interest free). The application did get as far as checking Experian. They didn't tell me why it was declined.

Thrugelmir

CreditCrunching wrote: »

The current account I was declined for was an RBS graduate account and I asked for a £3000 overdraft (interest free). The application did get as far as checking Experian. They didn't tell me why it was declined.

You may be surprised to here that it's because you already have £28.5k of available credit........So why would you require another £3k. :eek:

While you can justify to yourself the merits of the all the accounts and facilities you hold. A mortgage underwriter would have deep reservations. At the very least I would recommend reducing the available credit limits on the cards and cancelling the overdraft facilities on the accounts you retain.

Cheapest form of unsecured lending is personal loans. So underwriters question the need for people to have high revolving credit lines.

jonesMUFCforever

You may find that you will have to clear any credit card debt before getting a mortgage offer.
I would suggest clearing out any accounts that you really do not need.