Applying for new mortgage, pay off credit card first?

toffee87

Hi,

We have a credit card bill of £700. We are paying it off monthly and it'll be paid off in March next year. We have been saving for moving and I'm wondering whether it'd be better to clear it now? We're hoping to put our house on the market in the new year and therefore apply for a mortgage next year too.

lee111s

Just clear it before going for the mortgage application.

I assume it's interest free? If not, pay it off as soon as possible.

toffee87

It is yes, until Feb. I've read 3 months prior to application?

lee111s

Are you going to be close on affordability? Are you wanting to borrow the absolute max available to you?

If it makes you feel better, pay it off 3 months before. I've just applied for a mortgage and all they want is the cards paid off before completion, and that's only because we said we would.

toffee87

Ah ok, I've no idea as yet. When is it best to have the affordability assessed? I was thinking January?

We don't think we'd borrow the max, but not sure what we'd be eligible for yet.

ABBF08291

Further to this topic, I have entered accurate info on several affordability calculators and get varying results for max mortgage amounts from lenders.

I will soon be applying for a mortgage (joint application) and have recently made some sizable repayments to credit cards., however some remains:

Applicant 1 (myself): £10k CC debt, salary £60k
Applicant 2 (spouse) £0 CC debt, salary £34k

My CC debt brekadown:
- £4.5k on a £15k limit card
- £5.5k on a £7.5k limit card (balance transfer card 0% interest till late 2018)
- no other debts or loans for either applicant other than the above

I could clear this remaining £10k before completion if lender insists, but any repayment I make would not likely show on my credit report in time.

Conversely, I would rather have the broker put £0 on the application and be assessed on the assumption that post completion I would be debt free (e.g. being given 30 days after completion to pay it off).

But I am questioning the need to pay it off with some lenders. I would ideally like to borrow at least £420k, but with the above put into affordability calculators some lenders (e.g. halifax, hsbc) give results of over £420k and some (eg nationwide) give results of below £390k

lee111s

ABBF08291 wrote: »

Further to this topic, I have entered accurate info on several affordability calculators and get varying results for max mortgage amounts from lenders.

I will soon be applying for a mortgage (joint application) and have recently made some sizable repayments to credit cards., however some remains:

Applicant 1 (myself): £10k CC debt, salary £60k
Applicant 2 (spouse) £0 CC debt, salary £34k

My CC debt brekadown:
- £4.5k on a £15k limit card
- £5.5k on a £7.5k limit card (balance transfer card 0% interest till late 2018)
- no other debts or loans for either applicant other than the above

I could clear this remaining £10k before completion if lender insists, but any repayment I make would not likely show on my credit report in time.

Conversely, I would rather have the broker put £0 on the application and be assessed on the assumption that post completion I would be debt free (e.g. being given 30 days after completion to pay it off).

But I am questioning the need to pay it off with some lenders. I would ideally like to borrow at least £420k, but with the above put into affordability calculators some lenders (e.g. halifax, hsbc) give results of over £420k and some (eg nationwide) give results of below £390k

You need to speak to a broker.

It showing on your credit report is irrelevant. You'll be asked at the point of application if you have any oustanding debts. If they've been paid off the worst they'll ask for is proof.