Remortgage with interest free credit card debt

gavinhunt

My wife and I are looking to move house next year. Like many we've taken advantage of interest free credit cards/stoozing and have amassed £30k of debt on credit cards. This in itself is no issue to us as the money was used to do up our current house to increase its value by at least that much, so making it back when we sell.

However - I recently spoke with my mortgage provider Natwest about remortgaging to pay this off, as having any credit card debt seems to massively impact on what we can borrow for our next house. They informed me that although we passed the requirements to borrow the extra £30k, they couldn't do this for the reason of paying off this debt as it was interest free and therefore we'd technically be in a worse off position, which I understand recent rules mean they can't do.

Any ideas please? The only option I see is to get a normal expensive loan to pay it all off, say 5%, then quickly remortgage against this before incurring much interest, which Natwest could then do. Or might there be other lenders out there who would remortgage to pay off interest free debt? Or some other clever solution I haven't thought of?

Thrugelmir

Debt consolidation (by increasing an existing mortgage) isn't a line of business lenders wish to underwrite. After all there's only the borrowers word as to where the money was actually spent and the actual value added. There's also the concern that history will simply repeat itself. Whilst they also have alternative lending arms better suited to the purpose. Nothing to stop you applying to consolidate what remains of the debt when you purchase a new property.

As the debt is currently 0%. Pay off as much as is practically possible in the meantime. If your minimum payment is 3% then it should be reducing quite rapidly every month in any event.