Consolidate debt before mortgage application?

benkilla

Hi,


Myself and my fianc! are first time buyers and will be applying for a mortgage around March/April 2019.


I have 2 credit cards totalling around £6k. I am considering taking out a consolidation loan now to reduce the interest being paid and spread the loan over 5 years.


Is this is a good idea to do before applying for a mortgage in 9/10 months time?


Thanks!

foxy-stoat

No it wont matter if you have 2 credit cards or 1 loan for £6K.

You will unlikely get a low rate loan for debt consolidation but go for it if you want to - you are better of getting another credit card to balance transfer onto a 0 or low % rate and pay that down ASAP - and cancel the 2 cards you have got so you dont run up double the debt.

ACG

When you apply for a Mortgage, mortgage lenders will typically use between 3-5% of the balance of credit cards as your monthly repayment.

If you have a loan, they will use the monthly repayment.

If the loan has lower payments than the 3-5% then it may help affordability.

If affordability is not a problem then it makes no odds, just do whatever is better for you. If you are doing it though, I would do it sooner rather than later.

glentoran99

foxy-stoat wrote: »

No it wont matter if you have 2 credit cards or 1 loan for £6K.

You will unlikely get a low rate loan for debt consolidation but go for it if you want to - you are better of getting another credit card to balance transfer onto a 0 or low % rate and pay that down ASAP - and cancel the 2 cards you have got so you dont run up double the debt.

Why would you say that? Loans of around 3% widely available