remortgaging - pay off credit cards?

longwalks1

Im looking to move house to a larger property and will need to borrow more from my lender, and am currently straightening my finances as the move has come about all of a sudden (my choice). I currently owe the following:

£20k on 4 0% BT credit cards

I have £35 in a shares ISA, that I've built up over the last 2 years but isnt doing as much as it did last summer, its gone up about £2k this year.

Should I:
A) sell all my shares, pay off all the cards and put another £10k towards the deposit for the move
sell off £20k shares and clear the cards, and keep £10 in my ISA

I've been agreed the mortgage, even with the CC debt

Any help/advice greatly appreciated

HappyMJ

Whilst they are at 0% don't pay more than the minimum payment requested...

Personally I'd take the cash out of the ISA to pay the credit card when the credit card is just about to start charging interest.

You should always be reviewing the shares and thinking of selling if they are not performing. So if it's not making as much as it should then sell it.

If your credit is very good you can continue to stooge by taking out more 0% cards in the future and continue rolling over the debt as long as it's always worth doing. Eventually the offers that you can get run out or become too small and that's when you repay it and stop rolling it over any more.

longwalks1

Thanks Happy MJ, wasnt sure if having no CC debt would/could lower the mortgage rate I'd get offered, plus the extra £10k could go towards a larger deposit?
I've always juggled CC debt on 0% for years, and enjoy it as it costs very little (beats any loan), but with a big move coming up, wasnt sure if it;d look better in general having no CC debt?

Thanks again

HappyMJ

britishboy wrote: »

Thanks Happy MJ, wasnt sure if having no CC debt would/could lower the mortgage rate I'd get offered, plus the extra £10k could go towards a larger deposit?
I've always juggled CC debt on 0% for years, and enjoy it as it costs very little (beats any loan), but with a big move coming up, wasnt sure if it;d look better in general having no CC debt?

Thanks again

It doesn't reduce the interest rate....it reduces the amount you can borrow as you have commitments that are due but I'm thinking you don't need to max out your mortgage borrowings by using every penny of your disposable income on mortgage repayments.

Having more deposit can reduce the interest rate so if you were to repay all the debt you may need to borrow more which could increase the interest rate. If you figure it out it might actually cost more by paying it off. If you could get a fixed rate of 2% on a 60% LTV mortgage but 2.5% on a 65% mortgage it's payable on the whole balance so having a £10,000 balance on a credit card so you get a 60% LTV mortgage even on a card charging interest it can cost less overall.

It's very mathematical....you figure it out.

longwalks1

Ahhhh I get it now, many thanks