Would this be frowned upon? (offset mortgages)

davidc123_2

Hi,

I have an offset mortgage and have taken what I thought was a wise decision to take out a 2 year interest free credit card so that I can put all my purchases on this, then instead of paying it off I let the money sit in my offset account until it's time to pay off the card.

However I read that with the stricter lending rules that came in a few months ago, lenders will be checking your credit cards so it's recommended to have as little debt as possible on these.

I'll be renewing my mortgage in about year, and I'm just wondering if anyone knows whether it'd be in my interest to pay off the credit cards prior to applying for the new mortgage?

Thanks..

andymd

The credit card debt will be held against you when you make a remortgage application, I think they assume you're paying 5% of the balance each month (doesn't matter waht the actual repayments are) so the amount you will be able to borrow will be reduced accordingly.

If you can comfortably afford the repayments then a credit card balance shouldn't be a problem. Try using the affordability calculator on your lender's website to see what you can afford to borrow with/without the CC.

If it's tight, might still be worth going for it, but make sure you pay off the card 2/3 months prior to application to give the credit agencies time to update their records.

davidc123_2

Thanks for the info

getmore4less

Why do you need to change your offset mortgage?

If the LTV and income multiple are good the credit card may not make any difference.

Stoozing is the way to go if you can get the money cheap but watch the BT fees against the mortgage rate it is not a no brainer once you account for the true rate on the 0% money when you factor the fees and the min payments.

Thrugelmir

How much are you proposing to place on the card? £1k, £5k or £12k?

davidc123_2

I'll be coming to the end of the fixed rate and will be looking to fix for another few years. Wasn't planning on doing a balance transfer since the fee would be more than my mortgage rate, just planning on using 18-24 month 0% cards for about 12 months each time, meaning not all my balance will be on one card when it's time to pay it off.

I think the LTV / income should be ok with the debts. I just wasn't sure exactly how they judge someone with credit card debts - i.e does it affect their opinion of my credit rating. Sounds like it just affects the amount i can borrow, not my worthiness for credit.

getmore4less

What rate is the follow on(tracker /SVR) on your mortgage if the BT fees will be more?

0% Purchase cards if timed carefully can be maxed out quickly with normal expenses.