Applying for a mortgage - credit card balance

277Hz

Hi all,

My wife and I are looking to buy our first house and are going through the process of getting our deposit together and looking at what we might be able to get in terms of a mortgage. I was hoping to get some advice on how credit card balances could affect the size of the mortgage we could qualify for.

We have a couple of credit cards, but we only really use a shared Amex cashback card. We pay this off in full every month and have never paid a penny of interest. I believe it shouldn't really affect our credit score in that case (in fact I think it might help it?) However, because we do the majority of our spending on it where we can (because of the cashback), including some recurring payments and commuting costs etc, it usually has a fairly high balance each month before its paid off (around £1-2k).

When applying for mortgages, it often asks for your credit card balances. Should I declare the typical monthly balance on the credit card? Does it count as a balance that I should be declaring if it is always paid off? If so is it worth us stop spending on the credit card for the couple of months while we're looking for a mortgage so that we can declare £0 balance?

Any advice much appreciated!

Cheers

stu2500

If you pay it off in full, it shouldn't be considered in the affordability. But if you can stop using it for a few months prior to the application it may raise less issues than if you were to keep using it.

Are you using a broker or going directly with the mortgage provider? All they may do is ask for your statements from your credit card.

YHM

Lenders will be more concerned about reducing debts than revolving debts. If they can see that the credit card is being repaid in full on a monthly basis, then this should not be counted as a liability in your affordability assesment.

277Hz

Thanks both. Think we'll be going through a broker, we'll need all the help and advice we can get!

It makes sense to me that lenders won't be concerned about this debt, it's just filling in the forms and putting down the credit card debt that is putting me off. It might not make a difference, but I think I'll just pay it off manually and then stop using the card for a couple of months while we're going through the process, that way I can honestly but £0 on the form.

amnblog

YHM wrote: »

If they can see that the credit card is being repaid in full on a monthly basis, then this should not be counted as a liability in your affordability assesment.

Depending on the Lender.