Using Credit Card while Applying for Mortgage

chris250_2

Me and my partner have been looking for a house, after having offers declined I decided to wait a while and buy a new car and start looking again after I'd paid it off.

The plan was to put it on my 0% credit card (about £3500 going on card) and pay it off over a few months, after going and putting the deposit down on the car I got a phone call saying a house we looked at months ago will now take our offer.

We've put in for the mortgage and have been told by our adviser that it has been accepted and we have give him our payslips to send in, does this mean I can use my credit cards like before or can they still decide not to lend the money if I was to make a large purchase on a credit card.

I can afford both that's not the problem, just don't want to knock the chances of getting the house just because of the deposit. I would rather not loose the deposit but if it is going to spoil the chances of getting the mortgage I will just loose it.

Thanks for any help.

dgtazzman

Our IFA advised us to clear what we could off our cards and not add to the debt before completion, just to put the lender at ease and not risk them cancelling the mortgage just before completion because of growing debt. Sounded like good advice to me...

chris250_2

Thought that would be the case, just hate the fact of throwing the deposit away but not much I can do about it now.

kingstreet

A lender bases its decision to lend on your position and affordability on the day you apply. You should avoid anything which the lender may see affecting that, such as making a new application for credit.

If you are using an existing card, no new search will take place, but if you plan on increasing your debit balance by £3,500, many lenders will wish to take 5% of that from your income for affordability purposes if it will not be fully repaid before completion.

If you do not tell the lender, it may well not find out about it. However, many lenders have a "live" enquiry system so that during the time between application and completion, any change may be visible to them.

You should carefully consider how you approach this, in conjunction with advice from your advisor.

chris250_2

If I do go ahead its probably going to be too much of a gamble.

chanz4

I used my cards as normaly when buying, myn was fine

chris250_2

With a purchase as high as that mate?

hanvyj

How much are you earning and borrowing?

When my income changed, I used the 'affordability calculator' on the banks website - it gives a good idea of how close you are to their limits.

If you are only borrowing half as much as they are willing to lend someone with your wage (and you don't have a lot of other debts etc) then I'd say it was very safe to inform them. It may cause a bit of a delay as they check the affordability but its unlikely they will just pull out.

If you are close to their limit... I'd loose the deposit!

chris250_2

Earning about 30k a year combined, house is £32,500 putting £5k down so borrowing £27,500. Have another loan with about £4k left on it and pay £100 a month for it.

Mortgage is with abbey and according is there mortgage calculator I can borrow nearly £100k so cant be close is there limit.

Do you think I should let them know rather than just going out and buying it?

hanvyj

You will likely HAVE to let them know, or you are committing fraud (check your Ts&Cs, I came across a similar position with loosing a secondary income).

That said, you are borrowing less than your annual income and their borrow limit is over 3x what they are willing to lend you.

I don't think they would have much of a problem, but I'd get a second opinion from someone as 7.5k debt with 30k income might be a bit worrying in itself? Not sure.

chris250_2

Spoke to my mortgage adviser and he has told me not to loose my deposit and that it will make no difference at this stage and that the affordability is massive so I should be fine.

Surely he can't give bad advise, right?