Best & worst types of unsecured debt for mortgage renegotiations?

Timi_Hendrix_2

Hi there,

Originally posted on Debt free wannabe forum, and heard you guys might have some advice on my question.

This is the situation - my partner and I have about 5,250 in unsecured debts in overdrafts and CCs. I was going to apply for the Virgin cash transfer credit card offer, 0%APR for 36 months. I've done a credit check and my odds of getting this with a high credit limit look pretty good. 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!

YHM

Debt is debt.

Only main difference is how its calculated for affordability. Most lenders work on 3% of CC balance as a monthly commitment.

As long as the debt isn't to high a percentage against your income, it should be fine.

Timi_Hendrix_2

That's brilliant, thanks. Out of interest - at what % of income does the debt typically become a problem in your experience?