how long after i clear a debt can i apply for a mortgage?

longwalks1

I owe around £15,000 on 2 0% credit cards, and have £30k of shares that I do well from, with dividends and trading them. When I want to apply for a mortgage, will it be better to have no debt, and only £15k of shares? (I'm guessing yes)


And how long before applying should I clear off any debt so it doesn't show up/effect my application?


Thanks in advance

FLAPJACK

With 15k outstanding debt the future mortgage provider will be looking to see how much income is left each month for the mortgage payment to them after servicing the CC debt.

This will decide how much they are willing to lend you as they will take into consideration your other monthly commitments.

I would have thought that having a line of credit is no bad thing as demostrates that other lenders have taken you on and that you are servicing the debts ok.

The answer to your question I expect would be to reduce the amount outstanding on the cards..which would leave you more money each month to pay the proposed mortgage.

Maybe an idea (as shares are a volatile investment)would be to liquidate part of your share holding and reduce your CC debt by 50%...thereby increasing your monthly cashflow by 50% each month.

You could rebuild your shareholding annually by using the dividend to purchase more shares, thus rebuilding your shareholding at no real expense to you.

Wh05apk

It depends on who you intend using, most lenders will accept that if you say you will repay the debt, they will ignore it, other such as Abbey/Accord, assume you are a liar (yes really!) and will not repay the debt, and so deduct the repayments as a commitment which will affect affordability.