Credit Card

Smith15

Hi All

Myself and my partner are looking to buy a house in the next 6 months or so.

He currentluy has zero debt and I have around £3500 on a credit card. Should we make sure that we both have zero debts before we start looking at applying for a mortgage? Or is it not good to show that you have no borrowing? Sorry my question may sound silly but was wondering if it was better to use some of my deposit to pay it off or keep paying £150 off a month?

Thanks :j

frazell

Some debt is OK, it depends if it affects your affordability and the amount that you want to borrow.

Joy_mate

If you have no debt than its plus point towards applying mortgage. Lender might consider to stretch your application if you are on edge. However, mortgage application acceptance is completely on your affordability.
Also once you pay of your debt it may increase your credit rating, which certainly a corner for lender to look at.
One more to add, lender might ask (or get) for how long you have this debt. If you have this much low debt for long term, than lender will think how you would manage higher amount of mortgage.
If you have enough savings to pay off this debt and to cover ur deposit plus expense, no point of living with this debt.
Best wishes.

Thrugelmir

Going to take a while to pay the debt off at a £150 pm. Rather then worry about lenders. Consider your own peace of mind. Would you prefer it gone and therefore not something to have to worry about,

Jox

I think it's best to pay it off or get it as low as possible as when I went to banks (Santander, Nationwide, hsbc) asking about mortgages they asked how much credit card / loan debt I / we had and then this had an impact on how much they would lend. Try the hsbc mortgage calculator (it's in the section "how much could you borrow") online to see the difference paying off the debt will make.

Smith15

Thanks everyone! I've paid it off today (bar 200 left!) so will be fully debt free by next month. Thanks for your help!