New O2 Refresh contracts and mortgage

pinkteapot

I've had my mobile phone with O2 for years. I can upgrade next month. They've changed their contracts though, and now do O2 Refresh (they don't seem to do normal phone contracts any more).

Same sort of amount per month (£38) as I've always paid, but now it's split into two separate parts with two different contracts/agreements and two different direct debits:

1) £18/month line rental

2) £20/month "phone plan". This is paying for the handset, and it's now structured as a loan, regulated under the Consumer Credit Act. After the 24 month contract is up, I stop paying this as the loan is repaid and from that point on only pay the £18/month above.

The loan is only for £480. My question is - have any of the brokers on here found that these O2 Refresh contracts cause problems when applying for mortgages?

My concern is changing from just having a 'normal' phone contract on my credit file to a loan.

We're planning on remortgaging in August, so I'm wondering whether to wait until after that to change my phone?

Alternatively, I could just buy the phone outright (can afford it - just thought I might as well get it on a 0% loan from O2) and then do a sim-only contract. Or I could switch away from O2 as they've messed about with their contract arrangements!

Thrugelmir

Difficult to see why this would cause a problem in isolation.

What's the cash price for buying the handset outright? May be worth considering with a MSE hat on.

Buying anything on extended terms incurs additional cost.

SteelGoon

Do you realise that the same phone is only £549.00 from the Apple Store, not really getting a good deal with your 0% Interest Free anyway. :mad:

I assumed you meant the 16GB iPhone 5S, but that may not be the case.

It is almost always cheaper buying a phone SIM Free and getting a SIM Only contract over the 2 year period (if you can stump up the costs as the start)

pinkteapot

SteelGoon wrote: »

Do you realise that the same phone is only £549.00 from the Apple Store, not really getting a good deal with your 0% Interest Free anyway. :mad:

Yep - cash price from Apple = £549.

Price from O2 = £20/month over 24 months plus £49.99 upfront = £529.99.

£20 cheaper plus interest on having my cash in the bank for 24 months (ok, that'll be pennies at today's rate). Why the angry face?

Still looking into contracts and best options. Was just wondering about the principle of having a loan on my credit file rather than just a normal phone contract. With other networks (Three, EE etc), it'd be £38 a month as a standard phone line rental deal.

The loan part makes me nervous but, then again, most phone contracts have a minimum contract period and I've never been asked on a mortgage application what phone contract I'm tied in to! Who knows with the MMR though...

Paully232000

Just as an aside, have you looked at getting an refresh contract through quidco as I got one a few months ago and got £50 cashback with my refresh contract. I was changing from orange to O2 so not sure if that makes any difference but worth a try, and sold my old phone to them for another £88 or so.
My contract is for £22/month all in so you might get more cashback.