Best preparation for a mortgage application

hondac90

Hi,

I'm planning to apply for a mortgage but I have a few concerns. I would be grateful for any advice.

I had a traffic accident in 2007, whilst I have recovered as much as I will it caused a few credit issues, the main one being a 'default' settlement of an account in November 2013, everything else on my credit file looks ok, but I have 78% credit utilisation on the one credit card I have.

I have signed up with Experian to help manage my credit file, they are scoring me at 867.

I have been back to full-time work for 6 months, while I was 'recovering' I studied with the OU and got a degree.

I have managed to save a solid 5% deposit and I'd like to have a 10% by the time I apply for a mortgage. I am overpaying on my credit card by around 35%, have cut out almost all the excess spending I can and am saving about 45% of my salary each month.

I would like to apply for a mortgage in August, but I am willing to wait if I can significantly increase my chances of successfully get a mortgage.

I'm not sure whether I would be better paying more off my credit card, or just focusing on getting the biggest deposit I can.

What would your advice be?

pjread

if you are paying CC interest rates I'd clear that before anything else in general.... seems silly to hold cash at 1-2% interest and debt at 15-20%.

Thrugelmir

hondac90 wrote: »

I am overpaying on my credit card by around 35%, have cut out almost all the excess spending I can

Overpaying is a misnomer. Better to clear the debt entirely before saving seriously for a mortgage.

hondac90

Thanks, I will refocus my efforts on kill my CC bill.

HOMESWEETHOME

Why not move the debt onto a 0% credit card - barclay card are doing a 32month card at the moment 2% charge....

kingstreet

Stop paying Experian for that "score" as it means nothing.

Obtain all three versions of your credit file, not just one. Take all three to a meeting with an independent broker and they will be able to see what you mean by;-

a 'default' settlement of an account in November 2013

and be able to gauge the impact that will have on a 95% mortgage.

FWIW a card balance will see your affordability "taxed" by 5% of the balance. See what impact that will have on different lenders' affordability calculators.