Paying off CC regularly - affect Mortgage application?

MrMoo123

Apologies if wrong forum, but we will be looking to move in the not too distant future and have a mortgage agreed in principal.

However, something occurred to me today - I have a VA credit card that I use for every day spending to help me rack up the flying club miles. To keep on top of it, I pay it off as soon as the transaction hits my credit card account directly from my current account.

Conscious that any mortgage lender would want to see bank statements and suddenly thought - would it affect my application if there were multiple, sometimes daily transactions to MBNA ?

Wondered if I should stop doing this and perhaps pay it off monthly in one transaction? or maybe I shouldn't do this practice altogether? Or I am I worrying over nothing... Surely the fact that I use a credit card in this way shows I'm money savvy?

Appreciate anyone's thoughts

csgohan4

Why not setup the direct debit to pay off the card in full every month than micromanaging the account?

Either way it shouldn't affect your mortgage app as you always pay it in full every month and the money has a electronic trail.

It's about affordability now a days, so if you got 4k of income and you transfer 3 k of that to MBNA that's not good.

betmunch

csgohan4 wrote: »

Either way it shouldn't affect your mortgage app as you always pay it in full every month and the money has a electronic trail.

That's wrong I'm afraid there are an increasing number of lenders that will not look favourable on this scenario.


you may be fine but there will be an effect on the application so the correct lender will need to be sourced.


To completely avoid problems either engage a broker for the mortgage, or stop racking up the airmiles well before you do your application

csgohan4

betmunch wrote: »

That's wrong I'm afraid there are an increasing number of lenders that will not look favourable on this scenario.


you may be fine but there will be an effect on the application so the correct lender will need to be sourced.


To completely avoid problems either engage a broker for the mortgage, or stop racking up the airmiles well before you do your application

I guess if it looks like your spending quite a bit on your credit card it might not look good, however if it is the same as one lump sum would that not be the same as long as it stays within the affordability range?

There are plenty of forum goers here also who transfer money from one account to another taking advantage of various bonuses and incentives like the TSB and HSBC accounts, would they be disadvantaged too from moving this money around?

betmunch

csgohan4 wrote: »

I guess if it looks like your spending quite a bit on your credit card it might not look good, however if it is the same as one lump sum would that not be the same as long as it stays within the affordability range?

There are plenty of forum goers here also who transfer money from one account to another taking advantage of various bonuses and incentives like the TSB and HSBC accounts, would they be disadvantaged too from moving this money around?

Actually I should read the OP better before commenting on this, I actually think you are correct.


If there is a balance showing on the credit file at the time of application, even if you are clearing the balance off each month, this can be a problem for lenders.


After re-reading the OP I realise you are paying of the balance each time it hits the account so this would be highly unlikely to show as an outstanding balance on the credit file so would not cause an issue to lenders.


As for the large number of transactions on the bank statement I couldn't comment as I have never encountered this level of micro management before. It would certainly raise questions from an underwriter, but they may well be happy with the explanation.


If this case came across my desk its something I would check before submission to be sure its OK.

glentoran99

betmunch wrote: »

That's wrong I'm afraid there are an increasing number of lenders that will not look favourable on this scenario.


you may be fine but there will be an effect on the application so the correct lender will need to be sourced.


To completely avoid problems either engage a broker for the mortgage, or stop racking up the airmiles well before you do your application

arent people constantly being told that you should get a credit card and pay off in full to increase your appeal to lenders?

betmunch

glentoran99 wrote: »

arent people constantly being told that you should get a credit card and pay off in full to increase your appeal to lenders?

Yes, and that is still correct for the bulk of lenders, just not all of them any more.


If you have £50 for a tank of petrol each month its not going to make a difference.


If you put your families full months costs of £2000 and pay that off each month then there are lenders that will reduce their lending because of it.


Either will improve your chance of getting accepted, but the second method could see your maximum lending reduced by a number of lenders

MrMoo123

csgohan4 wrote: »

Why not setup the direct debit to pay off the card in full every month than micromanaging the account?

True I could DD the account but as I like to keep on top of what's been spent and therefore login daily, it takes me 30 seconds to make a payment. I guess the question is does one big payment look any different to lots of small payments for ultimately the same amount?

csgohan4 wrote: »

It's about affordability now a days, so if you got 4k of income and you transfer 3 k of that to MBNA that's not good.

3k to MBNA maybe, but I only live to my means as most of us do surely? If, after the new mortgage, it was only 2k left after 4k of income, then only 2k would be going to MBNA... my question is relating the only difference of rather then me popping to Tesco and buying the weekly food shop and paying with my debit card, I'm paying with my credit card, collecting the miles and then paying the credit card with my debit card.

MrMoo123

betmunch wrote: »

Yes, and that is still correct for the bulk of lenders, just not all of them any more.

If you have £50 for a tank of petrol each month its not going to make a difference.

If you put your families full months costs of £2000 and pay that off each month then there are lenders that will reduce their lending because of it.

Either will improve your chance of getting accepted, but the second method could see your maximum lending reduced by a number of lenders

But what's the difference between me putting my families full month costs of £2000 through the credit card and then pay it off over just paying it straight out the current account? Surely its coming from the same pot?

Just trying to understand how a mortgage lender might look at it. Maybe they might need to see the CC statements to see what the transactions are really for?

betmunch

MrMoo123 wrote: »

But what's the difference between me putting my families full month costs of £2000 through the credit card and then pay it off over just paying it straight out the current account? Surely its coming from the same pot?

Just trying to understand how a mortgage lender might look at it. Maybe they might need to see the CC statements to see what the transactions are really for?

The difference is the credit file



If you put it all on the credit card then there is the potential for when the credit check is done then there a £2000 credit card balance on your file.


If you put it on the debit card then there isn't

MrMoo123

betmunch wrote: »

The difference is the credit file



If you put it all on the credit card then there is the potential for when the credit check is done then there a £2000 credit card balance on your file.


If you put it on the debit card then there isn't

So by paying it off daily, I'm actually reducing the risk of there being a balance when the credit check is done?

Therefore, what I'm doing, is fine?

Thanks