Which is better (if any)? Loan or credit card

turtlemoose

My fixed rate is up in 9 months time - I've not yet experienced the new rules so am currently getting all my accounts in order so that everything is squeaky clean if I end up needing to go through affordability checks.

I currently have some debt, split between a 0% credit card and a personal loan. I'm overpaying the personal loan at the moment, and (if things stay as projected) it will be paid off before the mortgage application. (original end would have been Nov 2018)

This will leave £1700 on the 0% credit card.

Am I better off paying off the credit card sooner and starting an application with £1700 remaining on the loan instead?

Or does it not matter either way, £1700 debt is £1700 debt?

kingstreet

Lenders take 5% of the card balance, or the monthly loan payment, in calculating an affordable mortgage.

If the commitment will be repaid in full before the new mortgage completes, most lenders will ignore it and not "tax" your affordability.

turtlemoose

using that logic, the card is the better debt as 5% of that will be less than what the loan payment is set at. Thanks for your help