C'Card Debt and Effect on Mortgage Application

BISCUIT1

Hi not sure if anyone can help with this. I want to apply to borrow a certain amount on a mortgage. However, when I go into the affordability calculator of the lender I want to use and put in the amount of credit card debt I have the amount it says I can borrow is slightly below the amount i need. If I lower the cc debt a little on the figures it comes up with the number I need. My issue is that my cc debt is interest free and I have the money to pay it off sat in the bank on decentish interest and it is a big part of my emergency pot. When I come to properly apply for the mortgage if I explain this do you think they will take this into account i.e not count the cc debt or would I have to pay the cc off before I apply but then have a much smaller emergency fund?? (Sorry if this is waffly...it's been a long day!)

amnblog

They will count any credit card debt against your affordability unless you intend to clear that debt before completion of your mortgage.


N.B. There are Lenders that will factor in CC debt even if you do intend to repay it before completion.


Leave well alone.


If you need to borrow against a credit card to have sufficient emergency funds available you are not in a good position.

BLOW_FLY

Have you thought about lowering the limit on your CC?

Say your limit is £10k and you've got £3.5k on the account you're potential lender will see you have available credit of £6.5k still which will affect affordability calculations. If you called the CC company and asked them to lower the limit/s and there's enough margin to be gained from doing this it might help.

Alternatively use some money in your emerergency fund to pay down the balance say to £1k then reduce the limit on the card to £2k.

Obviously I don't know your figures, just offering ideas.


BF

ACG

Having the money offsetting the CC debt will not help. You would need to reduce the debt to get it through or find a new lender who will lend what you need, or possibly extend the term.

BISCUIT1

Thanks for your replies. I think I will just pay it off then. I didn't borrow to create an emergency fund it was originally used for home improvements and a car but I have been given half the value back in cash for the car and I had decided to save the money and earn the interest back as opposed to paying it off as interest free credit card for at least another year but to be on the safe side re mortgage application I will just pay off and reduce limit on the card.

aneary

Be careful about lowering the limit.

Lenders look at how much available credit you are using, I think under 40% is preferred.