Need advice - unsecured debts & mortgage

Timi_Hendrix_2

Hi everyone,

I'm a newbie on here, but have been working towards debt freedom for a while. I have a good idea of how I can get rid of most of our outstanding unsecured debts fairly soon, but have a technical question I was hoping you could help with...

This is the situation - we have about 5,250 in unsecured debts between me and my partner in overdrafts and CCs. I was going to apply for the Virgin cash transfer credit card offer, 0%APR for 36 months. Use the cash to clear the balance on the interest bearing debts and consolidate everything we owe into one place. This would save us about £65 just in interest payments a month. Realistically, we could probably pay £250/ month off the balance, which would make us debt free in a couple of years. In an ideal world I'd like to get rid of it all in a year - though of course, we don't live in an ideal world!

However, we have our mortgage renegotiation coming up this summer, and my OH is worried that taking on a new debt would be looked on badly by the mortgage company, and may affect the deal we can get. As she says, putting over 5k on a credit card might look worse in terms of monthly outgoings - ie we would have a heavier financial commitment from the CC just in terms of the minimum monthly payments than the overdrafts, which can in principle just sit there not getting paid off (though the overdrafts themselves accrue costs of ~£45/ month just in interest :mad:)

Does anyone have any advice on whether the 5k on a new 0% cash transfer card would look worse to the mortgage provider than the same 5k debts scattered around 2 overdrafts and 2 CCs? And is there anywhere I could point my OH to so as to assuage her worries?

Thanks in advance!

BoGoF

You might get better info on the Mortgages forum but I would say the one thing you do need to tackle is the overdrafts - no lender is going to want to see them and ideally you do not want them showing on your bank statements 3 months before you re-mortgage. Personally I would say as it is 6 months away your suggestion would be the best BUT there is no guarantee you will get a large enough credit limit to clear everything.

Timi_Hendrix_2

Cheers for that. Definitely want rid of the overdrafts asap - they've been hanging around our necks since we were students, and it's time for them to go. Then again, we were offered a larger mortgage 5 years ago with an even worse overdraft situation!

I'll head over to the mortgage board and see what they can say.