Remortgaging

lucie_1985

Ok, so my fixed rate deal is up in September which we've been paying at a rate of 3.14% and will revert to Nationwide's SMR of 3.99% if we don't switch to another deal. We've been very lucky in that London property price rises have pushed us to a place where we will have more than 40% equity so should be able to save quite a lot - down to 1.44%.

I also have about £4,500 on a credit card which I can (with some very tight belt squeezing) pay off in full by 1 September. The credit card is still in the 0% rate period until 1 July so it's still "free money".

Now, under the tighter lending rules and stress testing I am concerned that if they look at my bank statements for the 3 months prior to remortgage and see a huge credit card repayment each month leaving little else left will I be automatically refused?

Is it in fact better NOT to furiously pay off the card until after the remortgage? and in the meantime ahead of the 0% rate finishing transfer the balance to the fee free santander card?

lucie_1985

p.s. outstanding mortgage is c.267k and the property is valued at c.650k

Thrugelmir

Lenders will determine all they need to know about your credit usage from the datasets they receive from the CRA's. Trends, usage, 0% balance transfers etc. Computers can digest the data in matter of seconds, then compare it to the lenders current lending criteria.

kingstreet

Are you going to remortgage, or are you going back to Nationwide for a customer retention product?

If the latter, all the verbiage about stress testing and debt is redundant.

lucie_1985

Thrugelmir wrote: »

Lenders will determine all they need to know about your credit usage from the datasets they receive from the CRA's. Trends, usage, 0% balance transfers etc. Computers can digest the data in matter of seconds, then compare it to the lenders current lending criteria.

i.e. repay as fast as humanly possible and avoid applying for credit with another balance transfer as the amount I'm paying per month at the moment won't be assumed to be ongoing regular expenditure?

I don't use credit cards otherwise and we have an experian rating of 967.

Thrugelmir

lucie_1985 wrote: »

we have an experian rating of 967.

Meaningless number I'm afraid to say.

lucie_1985

Well, to the extent that it is used by lenders to qualify a credit rating out of 1,000 I don't really understand your post?

lucie_1985

kingstreet wrote: »

Are you going to remortgage, or are you going back to Nationwide for a customer retention product?

If the latter, all the verbiage about stress testing and debt is redundant.

Ideally I'd like to be able to borrow an additional amount in order to make home improvements given the price rises in the area - theoretically this could be achieved whilst still maintaining 40% equity and reducing the rate.

From what I understand, if you are borrowing more the process is more like an initial mortgage application in terms of the stress testing etc in any case. In terms of provider - I'm happy to go with whichever ticks the boxes of my requirements.

Elfbert

Thrugelmir is saying it's a meaningless number because it ISN'T what lenders use. Lenders look at all your incomes and outgoings, the average incomes and outgoings for people of your demographic, and how you personal use credit/debt etc. They don't look at that number at all. It means nothing to them. It's you, your habits and your credit history they look at, not a number.

Sounds like you might need a broker if you want to borrow more, to advise you on how best to go about it.

getmore4less

Income?

You have debt that needs belt tightening to pay off and you want to borrow more.
Not really free money if you spent it and have to cut back to pay it off.

Tighten your belt pay off the debt(£4500/7= £650pm), get a retention product save around £200 tighten a bit more save like mad for the improvements and do them over time.

amnblog

You owe £267,000 yet for not have £4,500 to hand to repay a credit card?

Can you really afford to borrow more?