Will Interest Free Balance Transfer Affect Mortgage Application?

minhp

Both my OH and I got 36+ months Interest Free Balance Transfers ~7k totally couple months ago (6-8 months). Currently we are paying the minimum payment.

I wonder whether we have to pay off all our BT all before applying for mortgage. We are first time buyers. Since the BTs are interest free for the next 2.5 years, would that have negative impact on our application? FYI, our total credit limit is £75k.

HappyMJ

It depends on how much you earn. The minimum monthly payment will be taken into account in calculating your affordability for a mortgage. If you aren't borrowing too much then it'll be okay.

It's a good idea to pay them off just before the 36 month offer expires but it's not essential.

minhp

Thanks for your quick response, HappyMJ. It's good to know they just take into account the minimum payment. We can afford to pay them all off now before our mortgage application but we would like to take advantage of the interest free period and leaving that into our saving accounts.

kingstreet

Lenders typically take 5% of the balance as the cost of card debt, not the minimum payment you make.

amnblog

This means that the load on your lending potential might be around £2,500 less mortgage lending for every £1,000 on the credit card account.


Fine if you are well clear, not so good if things are tight.