Mortage application and credit card debt

nickyg2000

planning on porting a mortage. I have £1500 of credit card debt this can be paid off on completion with equity I have in my home. So will having this debt affect my application if it can be paid off on completion?

Also any advsiers know if wollwich are doing 5x income multples? its show 5.5 on the calculators?

Thanks

marathonic

They usually take 5% of the balance as a monthly repayment when calculating affordability.

Therefore, £1500 of credit card debt would result in them assuming that you earn about £75 per month less than you currently do when determining whether you can afford the mortgage.

A 5x income multiple with any debt may be pushing affordability rules.

nickyg2000

But as the debt of £1500 will be clear on completion why would that be used in afordabilty?

JimmyTheWig

I don't believe that there is any way of guaranteeing that you will pay off the debt on completion.

nickyg2000

So there is know way that the solictors doing the conveycing can make sure its paid off ?

used this and seems to deducted about £40 a month from afrdoabilty http://www.woolwichintermediaries.co.uk/Woolwichmortgages/Affordabilitycalculator/IP1242620961812

Thrugelmir

nickyg2000 wrote: »

But as the debt of £1500 will be clear on completion why would that be used in afordabilty?

There's no guarantees. Lenders will view the application that's in front of them. In effect you are consolidating the debt.

Thrugelmir

nickyg2000 wrote: »

Also any advsiers know if wollwich are doing 5x income multples? its show 5.5 on the calculators?

Thanks

Stress test yourself. How would you cope if interest rates rose to 7% ?

The fact that you are consolidating debt suggests that you've little disposable income left over.

Contemptuous

JimmyTheWig wrote: »

I don't believe that there is any way of guaranteeing that you will pay off the debt on completion.

Some lenders will be able to make it a condition of the mortgage offer that debt is repaid on completion, and then it is the conveyancer's responsibility to ensure this happens. The debt wouldn't then be taken into account for affordability.

pete-20-11

Yeah I had that on a remortgage.

Pay off the credit card debt before completion.

Which was slightly pointless because I pay off my credit card by direct debit (full amount) every month!

nickyg2000

Cheers the link I posted dose stress test you to 7% new MMR rules. I'll speak to Barclays

deano3

Id be interested to hear what they said, im in the same boat.