Pre-emptive mortgage panic

feelymcfeel

My other half an I are looking at buying our first home together hopefully around this time next year. We'll be looking at property values of c£250k and should have a deposit of around £30k put together (FWIW we currently rent at £950pcm). Our joint income totals around £95k.

My financial history has been less then perfect in terms of using overdrafts, credit cards, and loans, although I've had no CCJs or anything and the only blemish on my record seems to be 1 credit card payment made 1 month late in January 2014.

I have recently taken a 0% credit card and paid off my overdraft balance using this making my total CC balance c£7k, and have a personal loan outstanding of £4k.

The £4k will be paid off by the end of August, and I plan to pay c£500/month off the credit card, which I estimate will leave me with o/s debt of £2.5k - £3k when we look to apply for a mortgage.

I'm having a bit of a panic about how much this will negatively affect any mortgage application. On the face of it, the affordability should be fine (assuming a lender uses 5% of a cc balance for these calculations), as we have no other debts and no dependents.

I suppose I'm just looking for the opinion of someone who is a little more au fait with this stuff than me. Will the debts have an impact on any application or am I get in all of a fluster unnecessarily?

NH1878

You could try Halifax DIP (decision in principle) tool on their website. They will look at your incomings, credit history etc and give you a decision in minutes, and it doesn't leave a mark on your credit score, no matter the outcome. I know friends who have had CCJ's etc and Halifax have had no issue at all lending, the only term was it had to be 10% minimum deposit. You've nothing to loose and it may put your mind at ease. Good luck!

kinger101

Moving the question to the mortgage forum might be better. Personally, I'd be speaking to a mortgage broker.

They'll ask probing questions which you probably wouldn't want to answer on an open forum. Like where are you pi55ing your income.

kingstreet

Accessing your own credit file doesn't leave a record visible to anyone else regardless of the CRA you use.

AdrianC

feelymcfeel wrote: »

should have a deposit of around £30k put together


I have recently taken a 0% credit card and paid off my overdraft balance using this making my total CC balance c£7k, and have a personal loan outstanding of £4k.

So you actually only have a deposit of £19k.
PAY YOUR DEBTS OFF BEFORE COUNTING YOUR ASSETS.

The £4k will be paid off by the end of August, and I plan to pay c£500/month off the credit card

Your household income is £8k/mo before tax. After tax, it's almost certainly between £5,500 and £6,000/mo. After rent, that's roughly £4,500-5,000 of disposable income per month. Yet you're pretending to save for possibly the single most important purchase of your life, while sounding like diverting less than 10% of that disposable income to clearing your debts is a borderline unattainable goal. What on earth are you spending it all on?

Priorities!

csgohan4

OP you need to get a grip of your debts, have a look at the debt free wannabee forums and see if you can hit that debt. Any debt will hit affordability 0% credit card or not

Kicking the can down the road isn't going to change your debt

ThePants999

I don't disagree with what's been written so far in this thread, but it all seems bit more hysterical then is really justified here. Let's be clear: a couple with a £95K joint income, asking for a £220K mortgage on a £250K property, with an almost unblemished credit history except for one late payment, is not going to struggle to get a mortgage because of a £3K credit card balance.

csgohan4

ThePants999 wrote: »

I don't disagree with what's been written so far in this thread, but it all seems bit more hysterical then is really justified here. Let's be clear: a couple with a £95K joint income, asking for a £220K mortgage on a £250K property, with an almost unblemished credit history except for one late payment, is not going to struggle to get a mortgage because of a £3K credit card balance.

And yet they had 11k to begin with, now put a large mortgage commitment on top and it can snowball

AdrianC

ThePants999 wrote: »

Let's be clear: a couple with a £95K joint income, asking for a £220K mortgage on a £250K property, with an almost unblemished credit history except for one late payment, is not going to struggle to get a mortgage because of a £3K credit card balance.

Except they aren't asking for a £220k mortgage. They only have £19k credit, so are after £231k, or 92.5% LTV.

ThePants999

AdrianC wrote: »

Except they aren't asking for a £220k mortgage. They only have £19k credit, so are after £231k, or 92.5% LTV.

Er, no.

Firstly, it seems you missed the bit where they said they'd have paid off all but £2.5-3K before applying for a mortgage. So even applying your logic, £223K, i.e. 89.2%.

Secondly, knocking debts off the deposit might give a nice simple way to look at things from some perspectives, but not LTV. From the bank's perspective, they will be asked to lend £220K on £250K of security. Other debts don't change that, they just affect affordability. And a £3K debt is pretty much entirely irrelevant on a £95K joint salary.

ThePants999

csgohan4 wrote: »

And yet they had 11k to begin with, now put a large mortgage commitment on top and it can snowball

I don't think that's pertinent to what I said, or to the OP's question.

I already said, I don't disagree with what's been said in this thread. Yes, the OP's money management could clearly be better if they've wound up with significant debt on a large income, and are taking so long to pay it off. But the OP's question was a simple one - will a £3K credit card debt have an impact on their mortgage application? The answer is almost certainly no. Everything else is off topic.