balance transfer the overdraft or not?

justruth

I am finishing off my degree, I have a very safe job lined up, and I am arranging to buy my flat from my parents. The plan is that I would pay 75% of the market value, as the agreement when they brought the flat was that I would have half of the increase in value. I anticipate this being accepted as deposit.

I also currently have 3 student overdrafts as I was in debt prior to even starting my degree. I have managed to get all of my debt down to the interest free overdrafts, but one of them cannot be converted to a graduate account (maintaining the free overdraft) from July, with a balance of £2500.

I have already budgeted and planned my debt repayment from when I get paid. It will take 5 months to completely clear the balance on the interest charging account and I calculated that I would be better off balance transferring the amount to my credit card at 0% with a 4% fee (still clearing the balance within 5 months but with less interest).

Would the balance transfer negatively affect my mortgage application? Would the 3 student over drafts count for more?

Advice would be appreciated.

audigex

Since your parents own the flat currently and are presumably not determined to get rid of it ASAP, it may be worth paying off your debts first for an easier ride through the application process if you're not on a deadline.

Edit: or is this already the plan and you're asking if the balance transfer now will look bad in 5 months when you apply for the mortgage?

Unlike a credit card application (in which case CC moves etc can be seen as a negative) a mortgage lender shouldn't really care: they're more concerned about the overall debt you have and the amount of your income going to service that debt. Personally I'd still stick with the current setup unless it saves you significant money to move

justruth

Unfortunately they are quite keen to get the cash out of the flat so I have to hurry up.

Thanks for the advice