Pay off credit card debt before mortgage application?

thenewbee

I'm a FTB, me & OH earning 34, 000 & 24, 000 respectively. Have a broker at L&C and a DIP for a Halifax help to buy - based on borrowing for 30 years 237, 500 for a 250, 000 house with 5% deposit. Maximum we can borrow on affordability criteria for Halifax is 262000

I currently have credit card debt of 2500 which is being balance transfered to new Lloyds card because that will be interest free. Lloyds dealt with my application a month ago but various problems with administration mean I haven't received it yet and done the balance transfer.

Should I repay this in full before any mortgage application? I don't have the money lying around but could take from the home moving pot of money now and make it up in the time between offer acceptance and completion. Will be very skint but if it's worthwhile I'm willing to do it. Being a FTB I've done my research and know it can make a difference but any advice on whether it would be worth the hassle appreciated.

Also any ideas as to how long it takes to show on credit report appreciated.

Thanks.

lee111s

It would be wise to do so. Did you declare the debt to Halifax on the application for the DIP? If not you'll definitely need to declare it before you apply for a mortgage.

They may give you a mortgage on the condition that the debt is paid off before completion.

thenewbee

Yes I did.

How important could it be to the mortgage application? I ask because most advice on here is that it will mean £100/month is deducted from income for the purposes of affordability but if that's the only effect I'm reluctant to pay it off because we're well below our maximum affordability amount (25k less)

Thrugelmir

The issue is that you have a 12.5k deposit of which £2.5k is borrowed money. You are looking to borrow over 4 times income over a long mortgage term. So suggests that your finances are stretched. Merely observations that may come in play once all your other credit history is taken into account.

pabl0

Might go against the advice your find on here but myself and my partner recently applied for a mortgage and on all affordability calculators having the debt pre-application compared to paying off before-hand made no difference.

I'd make it known the amount can be paid off before completion but also specify that you'd prefer to pay the debt off over time as its 0% and very manageable for your circumstances.

if its £100 a month and your not any-where near your limit i can't see it being a problem. If you do decide to pay it off then you can photo-copy the statement showing its £0 balance and send it to the MA rather then wait for the credit file to update.