Should I close all credit cards before applying for mortgage in principle?

MagicMoneyTree81

Thanks in advance for your help!

Shortly applying for a mortgage in principle.

I’ve three credit cards with available credit of £3,500, £5,000 and £6,000. Total balance at present is about £4,000 – on an interest-free deal.

Luckily we’ve inherited some money so I can now pay off the balance with some left over to give us a higher deposit.

Two questions:
1. Should I close all credit cards and just use my current account until we get the mortgage proper? If not, which should I leave open? Wondering if it’s better to have some credit and have a low utilisation rate than not having any at all.
2. Will lenders want proof you have the full deposit before granting you a mortgage in principle? Just thinking, what if our savings are, say, £1k short of what we need for the amount they can lend…? I can save the 1k in the months it inevitably takes to find and close a house.

Thank you!

Nebulous2

See you using a broker?

These are questions for the broker.

However, I've some thoughts.

Lenders don't like change. Close cards if you cannot trust yourself not to use them. Otherwise I'd leave them open.

If you are pushing your luck on affordability, then getting rid of the 0% credit card debt might help. Otherwise, it might help the deal you get to put down a larger deposit. You need to run the calculations from the lenders' calculators with and without the debt to see if you need to repay it to get the mortgage you want.

kingstreet

Here's one I made earlier;-

https://forums.moneysavingexpert.com/showpost.php?p=74760859&postcount=5

amnblog

As above MagicMoney Tree

kingstreet

MagicMoneyTree81 wrote: »

2. Will lenders want proof you have the full deposit before granting you a mortgage in principle?

No. That's a full application requirement.